Compensation philosophy

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How to create a comp plan

Write the initial guiding principles, in 1-2 pages, that you will use to define the company’s compensation philosophy regarding how the company compensates its employees.

Introduction

For an organization to implement an effective compensation and benefits policy, it is helpful to look at both the needs of the company and the individual, from both a practical and ethical perspective. Within this context is the legal and regulatory framework that guides the standards of HR policy.

Through this assessment, you will get an opportunity to establish the groundwork for studying compensation and benefits policy development. You will review labor laws that were referenced in your other human resource courses, and you will take a more focused look at the laws more relevant to wages and benefits. You will also look at the basic elements of any pay system.

Consider the ethical issues that influence compensation policy and how they may or may not harmonize with personal, corporate, and societal values. Also, think about the fundamental relationship an individual has with a company and how the contract for work and reward may represent a deeper contract between the employee, the employer, and the society in which the business is conducted.

Instructions

Imagine you are the HR manager for a new company just opening its doors in your community. The CEO has asked you to prepare the initial guiding principles you will use to define the company’s compensation philosophy regarding how the company compensates its employees.

Complete the following:

Describe the type of business, the number and types of employees (exempt and non-exempt), and the customer base you will use as your example company for this assessment, as well as the state and city or area of the state where your company is located.

Describe the factors will be used to determine salary decisions (for example, appropriate qualifications, contributions, performance, and budget considerations). 

Discuss where the company wants to fit regarding compensation in the industry and related market. Bottom quartile? Industry average? Top quartile?

Discuss whether the company will reward top performers with incentive pay.

Discuss the role benefits (health, 401(k), et cetera) will play in the overall compensation package. Does the company want the benefits plan to be below market, at market, or above market? Why?

Describe how other existing businesses in your community affect the guiding principles for your compensation guidelines. You can reference the ”

Overview of BLS Wage Data by Area and Occupation
” from the Bureau of Labor Statistics to help you research information for your response.

Additional Requirements

Your assessment should also meet the following requirements:

Written communication: Written communication is free of errors that detract from the overall message.

Formatting: One-inch margins, appropriate headers, and a title page.

Length: 1–2 double-spaced pages.

Font and font size: Times New Roman, 12 point.

Important: You will use this same company as the focus for the upcoming assessments in this course as well.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide criteria:

Competency 1: Evaluate the importance of compensation and benefits plans in attracting and retaining the most qualified talent. 

Describe a company for which compensation guiding principles will be created.

Describe the factors that will be used to determine salary decisions.

Discuss where the company wants to fit regarding compensation in the industry and related market.

Discuss whether the company will reward top performers with incentive pay.

Competency 2: Analyze base pay programs and the major laws and acts that govern employee pay. 

Discuss the role benefits (health, 401(k), et cetera) will play in the overall compensation package.

Explain how existing businesses in a company’s community affect the compensation guiding principles of the company.

Write the initial guiding principles, in 1-2 pages, that you will use to define the company’s compensation philosophy regarding how the company compensates its employees.

Introduction

For an organization to implement an effective compensation and benefits policy, it is helpful to look at both the needs of the company and the individual, from both a practical and ethical perspective. Within this context is the legal and regulatory framework that guides the standards of HR policy.

Through this assessment, you will get an opportunity to establish the groundwork for studying compensation and benefits policy development. You will review labor laws that were referenced in your other human resource courses, and you will take a more focused look at the laws more relevant to wages and benefits. You will also look at the basic elements of any pay system.

Consider the ethical issues that influence compensation policy and how they may or may not harmonize with personal, corporate, and societal values. Also, think about the fundamental relationship an individual has with a company and how the contract for work and reward may represent a deeper contract between the employee, the employer, and the society in which the business is conducted.

Instructions

Imagine you are the HR manager for a new company just opening its doors in your community. The CEO has asked you to prepare the initial guiding principles you will use to define the company’s compensation philosophy regarding how the company compensates its employees.

Complete the following:

Describe the type of business, the number and types of employees (exempt and non-exempt), and the customer base you will use as your example company for this assessment, as well as the state and city or area of the state where your company is located.

Describe the factors will be used to determine salary decisions (for example, appropriate qualifications, contributions, performance, and budget considerations). 

Discuss where the company wants to fit regarding compensation in the industry and related market. Bottom quartile? Industry average? Top quartile?

Discuss whether the company will reward top performers with incentive pay.

Discuss the role benefits (health, 401(k), et cetera) will play in the overall compensation package. Does the company want the benefits plan to be below market, at market, or above market? Why?

Describe how other existing businesses in your community affect the guiding principles for your compensation guidelines. You can reference the ”
Overview of BLS Wage Data by Area and Occupation” from the Bureau of Labor Statistics to help you research information for your response.

Additional Requirements

Your assessment should also meet the following requirements:

Written communication: Written communication is free of errors that detract from the overall message.

Formatting: One-inch margins, appropriate headers, and a title page.

Length: 1–2 double-spaced pages.

Font and font size: Times New Roman, 12 point.

Important: You will use this same company as the focus for the upcoming assessments in this course as well.

Competencies Measured

By successfully completing this assessment, you will demonstrate your proficiency in the following course competencies and scoring guide criteria:

Competency 1: Evaluate the importance of compensation and benefits plans in attracting and retaining the most qualified talent. 

Describe a company for which compensation guiding principles will be created.

Describe the factors that will be used to determine salary decisions.

Discuss where the company wants to fit regarding compensation in the industry and related market.

Discuss whether the company will reward top performers with incentive pay.

Competency 2: Analyze base pay programs and the major laws and acts that govern employee pay. 

Discuss the role benefits (health, 401(k), et cetera) will play in the overall compensation package.

Explain how existing businesses in a company’s community affect the compensation guiding principles of the company.

3/24/23, 4’49 PMCreating a Compensation Philosophy Scoring Guide

Page 1 of 1https://courserooma.capella.edu/bbcswebdav/institution/BUS-FPX/BUS-FPX4043/220700/Scoring_Guides/a01_scoring_guide.html

Creating a Compensation Philosophy Scoring Guide

CRITERIA NON-PERFORMANCE BASIC PROFICIENT DISTINGUISHED

Describe a company
for which
compensation
guiding principles
will be created.

Does not describe a
company for which
compensation
guiding principles will
be created.

Identifies a
company for which
compensation
guiding principles
will be created.

Describes a
company for which
compensation
guiding principles
will be created.

Describes a company for
which compensation guiding
principles will be created,
incorporating details that
provide insight into the
business environment of the
selected company.

Describe the factors
that will be used to
determine salary
decisions.

Does not describe
the factors that will
be used to determine
salary decisions.

Identifies the factors
that will be used to
determine salary
decisions.

Describes the
factors that will be
used to determine
salary decisions.

Justifies the factors that will
be used to determine salary
decisions.

Discuss where the
company wants to fit
regarding
compensation in the
industry and related
market.

Does not discuss
where the company
wants to fit regarding
compensation in the
industry and related
market.

Identifies where the
company wants to
fit regarding
compensation in the
industry and related
market.

Discusses where
the company wants
to fit regarding
compensation in
the industry and
related market.

Analyzes where the company
wants to fit regarding
compensation in the industry
and related market.

Discuss whether the
company will reward
top performers with
incentive pay.

Does not discuss
whether the
company will reward
top performers with
incentive pay.

Identifies whether
the company will
reward top
performers with
incentive pay.

Discusses whether
the company will
reward top
performers with
incentive pay.

Justifies the reasons why the
company will reward top
performers with incentive pay,
or not.

Discuss the role
benefits (health,
401(k), et cetera) will
play in the overall
compensation
package.

Does not discuss the
role benefits (health,
401(k), et cetera) will
play in the overall
compensation
package.

Identifies the role
benefits (health,
401(k), et cetera)
will play in the
overall
compensation
package.

Discusses the role
benefits (health,
401(k), et cetera)
will play in the
overall
compensation
package.

Analyzes the role benefits
(health, 401(k), et cetera) will
play in the overall
compensation package.

Explain how existing
businesses in a
company’s
community affect the
compensation
guiding principles of
the company.

Does not explain
how existing
businesses in a
company’s
community affect the
compensation
guiding principles of
the company.

Discusses how
existing businesses
in a company’s
community affect
the compensation
guiding principles of
the company.

Explains how
existing businesses
in a company’s
community affect
the compensation
guiding principles of
the company.

Explains how existing
businesses in a company’s
community affect the
compensation guiding
principles of the company,
and why the selected
compensation principles are
viable.

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