A company's compensation philosophy often determines how a company decides to pay you. Compensation philosophy is defined by World@Work, one of the nation's most respected total rewards organizations, as "principles that ensure that a compensation program supports an organization's culture." Companies with a mature HR department are likely to have a formalized compensation philosophy. Smaller or more entrepreneurial companies may have an informal compensation philosophy or none at all. There are advantages and disadvantages to each.
Common Traits for Companies with a Mature HR Infrastructure
There are a number of reasons to go to work for companies with a more mature HR department. Some of the most common reasons are:
- This company will most likely have a vision of a career ladder. You should not have any difficulties understanding what the next developmental steps are for you.
- Larger companies tend to have more training opportunities, both internal and external.
- Richer benefits. Often larger companies give you benefits that you may not even appreciate until they are gone. Benefits such as free or reduced health insurance, a higher 401k match, better tuition reimbursement, a bonus program, a subsidized cafeteria, etc.
Larger companies with Compensation Departments are able to be more proactive, or at least more fair and knowledgeable when resolving pay issues. Common ways a Compensation Department enhances the organization are:
- Ensuring salaries within the organization are fair (aligned with the market), or that an action plan is in place to make corrections.
- Comparing employees' salaries to the appropriate jobs in the market to ensure competitive pay.
- Ensuring that any type of merit pay, cost-of-living allowance, promotional increases or other compensation is fairly administered.
- Aware of pay trends and able to propose and justify salary adjustments as they become necessary.
An effective Compensation Department within a company makes for a very well-developed pay program with established processes and policies for the company and its employees.
Common Traits for Companies without a Mature HR Infrastructure
Just because a company does not have a mature HR department does not mean that you have to be concerned about working for them. You simply have to keep your eyes open and make sure you are not going to be overlooked. Some common traits are:
- People that know how to sell their value can create their own success, without the constraint of restrictive pay increase guidelines.
- More rapid ascent up the promotion ladder. Often you may be creating your own promotion ladder as the guidelines may not be well-defined. If you become a top performer in a profitable company, you could be on your way up the ladder at a faster rate than in a developed system.