Chapter 15: Compensation: Choosing and Using the Best System for Your Organization

This chapter describes how to choose and construct a compensation system best suited to your organization. The chapter draws on the published literature as well as the authors’ collective experience as compensation consultants with a variety of organizations. While the chapter focuses on a public sector organization (Anytown, Missouri), its lessons apply broadly to nonprofit and private sector organizations alike. The chapter begins with a discussion of compensation systems in general, including the establishment of a compensation philosophy. The chapter then provides a step-by-step example of how to create a compensation system, conduct a salary survey, and maintain an established compensation plan. The chapter also discusses how to choose and utilize a compensation consultant. At the end of the chapter, the reader should be a wiser consumer of compensation systems and better prepared to administer or navigate his or her organization’s compensation plan.