What Is a Compensation Structure

Compensation structures are the pay-based frameworks companies use to establish fair and equitable pay for all employees in the organization. A compensation structure gives a business clear guidelines for assigning initial pay rates, managing raises and distributing bonuses.

What is the purpose of a compensation structure?

Employers want to ensure that they are able to pay what is necessary to find, keep and motivate an adequate number of qualified employees. Creating a compensation structure that starts with competitive base pay is critical. Employees also compare their jobs and pay to jobs and pay in other organizations.

What are the components of compensation structure?

Components of Compensation Management – Wages and Salary, Incentives, Fringe Benefits, Perquisites and Non-Monetary Benefits. Components of compensation means components of remuneration to employees. An average employees in the organized sector is usually entitled to various benefits.