Why Compensation Managers Should Wear Capes

by Candice Wolken - May 3, 2019
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Compensation managers are tremendously valuable to any business. Employee salary and benefit expenses typically represent 40% to 80% of an organization’s gross revenues, and comp managers manage every penny of the process. Their work impacts productivity and is faster than a speeding budget. Some say they can leap office buildings in a single bound!

Compensation Managers Save the Universe

The Bureau of Labor Statistics states that compensation and benefits managers plan, develop, and oversee programs to compensate employees. While accurate at a simplistic level, the impacts of compensation work can be more powerful than a locomotive – and felt throughout an entire organization.

  • Employee engagement and productivity – Perceptions of being paid fairly have repeatedly been shown to have a positive impact on employee engagement and productivity. If an employee believes they are compensated fairly, they are more likely to perform at a higher level.
  • Employee retention – Fair pay play an important role in employee retention. High-performing employees can become a flight risk when they are not paid equitably and competitively. Voluntary turnover can be quite costly to a business. In addition to the costs of recruiting, training and lost production, other turnover costs can include reduced employee morale.
  • Company profitability – Payroll is the largest expense at many organizations. A good compensation manager ensures employees are paid fairly, and also takes care to make sure they are not overpaid to protect organizational profitability.
  • Legal compliance – Compensation managers ensure organizational compliance with applicable federal, state and local regulations such as the Fair Labor Standards Act and minimum wage laws.

Super Powers for HR Decision-Making

Since compensation programs have such a significant impact on an organization’s success, your organization should ensure the right tools are available for compensation decision-making.


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