itsual Compensation Design
Overview
Compensation design translates philosophy into structures: how pay is set, progressed, and differentiated. It must balance market reality, internal equity, and budget.
When to Use
- Creating or revising pay bands
- Incentive and bonus plan design
- Equity/refresh frameworks
- Pay transparency readiness
Core Practices
- Articulate pay philosophy (market position, mix, differentiation)
- Build bands linked to job architecture levels
- Use market data with judgment about relevance
- Design variable pay to reinforce desired outcomes
- Govern exceptions and offers that break structure
- Model cost impact of programs before launch
Principles
- Unclear philosophy produces ad-hoc inequity
- Market data is an input, not an autopilot
- Incentives shape behavior — including unintended behavior
- Transparency trends require cleaner structures
Verification
- Philosophy and bands are documented
- Variable plans have measurable objectives
- Exception governance exists