HR Basics is a series of short courses, designed to highlight what you need to know about a particular human resource management topic. In today’s HR Basics, we explore compensation, highlighting the three elements of a base compensation system internal alignment, external competitiveness and compensation management.

Compensation is pay provided by an employer to an employee in return for work. Total Rewards is a concept that describes all the tools available to an employer that may be used to attract, motivate and retain employees.

Compensation is comprised of two core elements fixed Pay or base pay that does not vary and variable pay which changes with performance or results. A basic model for building a compensation plan includes three elements internal alignment, external competitiveness and compensation management. Seven steps, or actions are organized in the three critical areas of compensation plan development. In this course we will take a look at each step.

Compensation is a critical element of your total rewards strategy. A strong base pay structure is built through internal alignment, external competitiveness, and compensation management.