Compensation and Benefits Package Analysis

Developing Compensation Packages and Benefits Analysis

Timothy M. Johns

Human Resources – AMP-434

June 2, 2013

Developing Compensation Packages and Benefits Analysis

It is in every employer’s best interests to attract and employ the most talented individuals to help them carry out organizational goals. In the competitive capitalist marketplace, companies are forced to weigh their options in regards to how best attract and retain such individuals. The compensation package stands as the primary component in attracting and rewarding employees for services rendered to the organization, yet compensation packages differ vastly from one another. As such, when developing a compensation package for any given position, several factors must be considered such as job structure, pay level, market, and benefits.

Job structure is an important factor in determining compensation as it is defined as “the relative pay of jobs in an organization” (Noe, Hollenback, Gerhart & Wright, 2012). This is a comparison of like positions across organizations and how their compensation relates to one another within a job family. According to salary.com, “the data is intended to provide a reasonable range for typical compensation earned by the typical person working in that job,” ("Methodology and sources," n.d.). As an example, when looking at the positions for an Entry-level Software Engineers (Software Engineer I), Intermediate Software Engineers (Software Engineer II), and Expert Software Engineers (Software Engineer III) within the Phoenix, Arizona market, all three of these positions share a similar job description with increasing levels of responsibility, but their primary job functions remain roughly the same according to salary.com (2013). As such, their compensation packages should be reflective of this.

In addition to job structure when considering compensation packages, pay level should also be factored in. Pay level refers to the average level of compensation...