# Compensation Design

> Design compensation structures — base, variable, equity — that attract, retain, and motivate while remaining equitable and affordable. Use when building pay bands, incentive plans, or pay philosophy.

- Skill: `itsual/compensation-design` (Agent Skill)
- Install (CLI): `npx skillmds@latest add itsual/compensation-design`
- Raw SKILL.md: https://api.skillmd.com/api/skills/itsual/compensation-design/raw
- Safety review: pending
- Works with: Claude Code, Claude.ai, OpenAI Codex
- Category: Coding & Dev Tools
- Author: itsual (https://skillmd.com/u/itsual)
- Updated: 2026-09-21
- Page: https://skillmd.com/skills/itsual/compensation-design

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# 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