Craft a Compensation PhilosophyLay the groundwork for compensation that is competitive, cost effective, and brand-aligned.Employee compensation often comprises more than 70% of an organization’s ongoing operating expenditure. Yet few organizations have plans in place to properly direct and control this expenditure.A well-designed compensation philosophy is the foundation of an effective compensation strategy. If you don’t practice what you preach, you’ll soon lose credibility and your philosophy won’t be worth the paper it’s written on.A compensation philosophy needs to be specific in order to effectively direct compensation practices. It needs to specify the target approach (lag, match, lead) and the target market position it desires for each employee segment.The existence of a compensation philosophy gives employees something to point to if practices aren’t measuring up. Ensure that there is an ongoing commitment to the core objectives before posting them on the walls.

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