Compensation Purpose and Strategy

Running head: COMPENSATION PURPOSE AND STRATEGY 1
Compensation purpose and strategy
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COMPENSATION PURPOSE AND STRATEGY 2
Compensation philosophy
The compensation philosophy selected for this case is Specific numbers in the banking
industry. The banking industry utilizes particular numbers to lay out the compensation structure
for the employees. Employees are motivated by compensation, and they tend to look for jobs
that suit their talent, creativity and give salary compensation or other benefits (Lueg, 2015). The
level and the type of compensation in the banking industry are determined by strategies,
performance, and policies of various banks. Example the industry may decide to use years of
experience when giving compensation. The entry level with no or zero experience working with
any bank will earn $ 30,000. After one year, if he or she maintains good performance, the salary
will be increased to $ 33,000. The numbers of years that one has while working in the banking
industry or another related firm determines the compensation that will be given. The employee
working at the junior level will be satisfied with the compensation that will be given to him or
her hoping that in the next year the salary will increase.
Benefits and risks
For instance, philosophy structure is used in the compensation comparison with both
external and internal competitors. The following are benefits and risks which are linked to
compensation strategies. Benefits to meet the market are; helps the employers in setting pay level
which is average or relative to those in the marketplace (Leekha, Chhabra & Sharma, 2014). The
organization can also retain and attract employees with top talent through maintaining
compensation structure that is competitive. On the other hand, meet the market needs the
employers to be a continuous and huge adjustment in the structure of compensation when the
labor market is tight. Similarly, Lead to the market initiates increased candidates supply,