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What Does a Compensation Manager Do?

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Man in business attire with folded arms

Compensation is a Specialty Area in Human Resources

Image Copyright iStockphoto / Nicholas Mono
Question: What Does a Compensation Manager Do?
Answer:

Compensation managers are responsible for researching, establishing, and maintaining a company's pay system. In performing this significant function, the compensation manager has to research and understand the current and upcoming competitive markets for employee pay and benefits. They must find ways to ensure that pay rates are fair and equitable to retain and recruit employees.

The compensation manager may specialize, in larger organizations, in specific areas such as job classification or market pay studies. At a government or civil service employer, the manager establishes the pay grades that govern employees' level and amount of pay.

A compensation manager, in a larger organization, is often assisted by staff specialists. They may conduct salary surveys to see how their pay rates compare with those of other companies. They may also work with established online sites that specialize in compensation to do market comparisons of pay by region, number of employees, and job responsibilities.

It is the compensation manager's job to see that the company's pay scale complies with ever changing state and Federal laws and regulations. In addition, depending on the needs of the organization, compensation managers may oversee their company's performance evaluation system. They may also handle employee benefits. Employee reward systems such as bonuses, merit raises, and pay-for-performance plans may also fall within their responsibility.

In small to mid-size organizations where employees must wear many hats, the responsibilities of a compensation manager are handled by the Human Resources Manager or HR Generalist.

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