Benchmarking: The process of comparing an organization’s practices, processes, or performance against those of other similar organizations or industry standards.
Broad banding: A compensation structure that groups jobs into a smaller number of wider pay ranges or “bands,” allowing for greater flexibility in pay administration.
Classification: The process of grouping jobs into categories based on similarities in duties, responsibilities, and qualifications.
Compensation philosophy: A set of guiding principles that articulate an organization’s approach to employee compensation, including its goals, values, and strategies.
Compensation structure: The framework an organization uses to determine pay levels for different jobs, including pay grades and salary ranges.
Compression: A situation where the pay differences between employees with various levels of experience, skills, or responsibility become too small, leading to perceptions of inequity or unfairness.
External equity: The principle that an organization’s compensation levels should be competitive with those of other relevant organizations in the labor market.
Internal equity: The principle that employees within an organization should be paid fairly in relation to one another, based on factors such as job responsibilities, skills, and performance.
Job evaluation: The process of systematically determining the relative value of different jobs within an organization, based on factors such as skill requirements, responsibility level, and working conditions.
Market pricing: A compensation approach that compares an organization’s pay against market data for similar jobs in other relevant organizations.
Market Median: Also referred to as the 50th percentile. This is a figure that represents the middle point of all salaries within a specific benchmark position.
Pay equity: The principle that employees should be paid fairly based on their skills, experience, and job responsibilities, regardless of factors such as gender, race, or age.
Pay grades: A system of grouping jobs into categories or levels based on their relative value to the organization, with each grade assigned to a specific pay range.
Pay range: The minimum, midpoint, and maximum pay levels established for a particular pay grade or job category.
Performance-based pay: A compensation approach that links pay to individual or organizational performance, using tools such as merit pay, bonuses, or incentive plans.
Salary survey: A tool used to collect external salary data for specific jobs or job categories, which results in market data.
Total rewards: A comprehensive approach to compensation that considers both financial and non-financial elements, such as base pay, bonuses, benefits, work-life balance, and career development opportunities.
Years of Service: The amount of time an incumbent has served in their current role/position.
