- Compensation is typically the number one operational cost in organizations, yet few have total rewards strategies in place to properly direct and control this expenditure.
- Many organizations experience an inconsistent application of compensation programs due to a missing or outdated compensation philosophy, resulting in internal and external inequities.
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Our Advice
Critical Insight
- The compensation philosophy should be primarily driven by organizational strategy and support the achievement of strategic objectives.
- A pay philosophy provides decision makers with guidance to ensure that compensation practices are consistent and aligned across the organization.
Impact and Result
- A well-designed compensation philosophy clearly articulates the organization’s high-level approach to pay for each of its employee segments, including its target competitive position.
- There are both internal and external factors that influence compensation, and these factors need to be explored to develop a compensation philosophy that fits your organization’s context.
- McLean & Company’s approach guides HR through developing a compensation philosophy that supports organizational goals and is relevant for the operating environment.