What Does a Compensation Analyst Do?
Determining how to pay your employees requires a thorough understanding of market trends, internal pay structures, as well as labor law and company financials.
Rather than waste time doing trial and error, companies rely on compensation consulting to help them plan, design, and implement compensation strategies. Learn more about what compensation analysts do to help organizations achieve their objectives!
What Is a Compensation Analyst?
A compensation analyst is a professional who specializes in helping organizations develop compensation structures based on relevant data, in order to achieve objectives such as attracting more job candidates, increasing job satisfaction, improving employee retention, and contributing to career development.
Compensation analysts typically have at least a bachelor's degree in human resources, psychology, or any related field. Their past work experience is usually in HR or a finance-related field, which helps them gain relevant expertise and knowledge on compensation.
What Do Compensation Analysts Do?
Compensation analysts are concerned with compensation and salary planning, development, and implementation. Below are some tasks that compensation analysts undertake in order to help organizations manage their end-to-end pay structure.
1. Identify Company Priorities
Before creating any compensation strategy, a compensation analyst should first understand what the company wants to achieve, as well as the current situation of the company.
The compensation analyst should find out what a company is capable of in terms of finances and budget. Then, they should identify business objectives that are achievable through compensation.
2. Conduct Market Research
A compensation analyst should always create plans and provide recommendations that are relevant to the industry. To do this, they conduct market research, learn about the practices of competitors, and compare internal jobs to the external market.
When doing market research, compensation analysts find out the going rates for similar jobs in the industry and geographic location, as well as learn about the internal pay structure of competitor organizations.
3. Design Pay Structure
Compensation analysts design pay structures based on their gathered market data, as well as the company's financials and budget situation.
The resulting pay structure should be fair, competitive, and aligned with the company's identified objectives. This process may involve creating job classifications and grade levels, establishing pay ranges for each level, and determining methods for determining pay within those ranges.
4. Create Job Descriptions
Compensation analysts create job descriptions by gathering information through interviews and industry research, then writing detailed and accurate descriptions that include job titles, responsibilities, qualifications, and other relevant information for recruiting, compliance, and fair pay structures.
5. Collect and Analyze Data
Compensation analysts collect and analyze data before designing a salary structure that works, and during its implementation. Doing so allows them to identify internal equity issues and to benchmark the company's pay against that of its competitors.
This is helpful when it comes to evaluating the effectiveness of existing pay structures, so the company can make changes as needed to stay competitive and attract and retain top talent.
6. Evaluate and Report Compensation Metrics
Compensation analysts evaluate and report compensation metrics to help management gauge the effectiveness of the company's compensation strategy and pay structure. Some typical compensation metrics tracked include pay levels, pay ranges, internal pay equity, turnover rates, recruitment costs, and employee satisfaction.
7. Ensure Legal Compliance
An important aspect of compensation is compliance with state and federal laws. Compensation analysts help companies ensure legal compliance by staying informed of laws and regulations related to compensation and benefits, such as the Equal Pay Act, the Minimum Wage Act, the Affordable Care Act, and the Family and Medical Leave Act.
More importantly, compensation analysts make sure that a company's pay structure and overall compensation strategy comply with these laws and regulations.
8. Manage Pay Raises
After determining an effective compensation and reward packages to be included in job descriptions and offers, compensation analysts also manage any adjustments to pay. They conduct market research, analyze internal pay structures, consider changes in job duties, skills, and achievements of employees in managing pay raises.
Moreover, they recommend these pay raise strategies based on the company's financials and budget constraints, as well as the laws and regulations related to pay raises and compensation.
Entrust Your Compensation Consulting to FutureSense Experts
Leave your organization's compensation strategy and implementation to professional compensation analysts. Get reliable and trusted compensation consulting with FutureSense. Our compensation analysts are thoughtful, responsive, and authentic, making us the best partner for future-minded organizations like yours!
Reach out to FutureSense to learn more about how our services can help future-proof your business!
About FutureSense
FutureSense is a management consulting firm that provides integrated solutions to build and sustain human capital capacity. The firm can work with you by offering support and guidance to manage your workforce. To learn more about FutureSense, please visit FutureSense.com.