Compensation Analyst: All You Need to Know About the Role

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Compensation Analyst: All You Need to Know About the Role

In the competitive candidate market, organizations need to get their compensation strategy right. That’s why a compensation analyst is a fast-growing role and a career path worth considering. Let’s explore the role of a compensation analyst and how you can become one.

Contents
What is a compensation analyst?
A sample compensation analyst job description
How to become a compensation analyst
Compensation analyst salary

What is a compensation analyst?

A compensation analyst works within the Compensation & Benefits or Human Resources department and their role is to help organizations develop fair compensation structures to attract and retain employees by analyzing various data.

They research and evaluate job requirements, competitors’ benefits and salaries and assess current roles to ensure the organization is competitive and complies with state and federal regulations.

They are responsible for designing the organization’s pay structure. It includes determining new employees’ remuneration and regularly reviewing all employee’s compensation packages (base pay, incentives, bonuses, commissions, and stock options) to ensure they are fair and within the employer’s capacity.

A compensation analyst helps determine when to give raises, analyzes trends that will shape compensation, and makes recommendations on how the organization can respond to those trends.

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Successful compensation analysts apply skills and competencies like business and financial acumen, strong data literacy, including qualitative and quantitative research methods and analysis, and knowledge of HR policies.

This role is typically found in larger businesses.

According to the U.S Bureau of Labor Statistics, employment of compensation analysts is projected to grow by 10% by 2030.

How to Become a Compensation Analyst

A sample compensation analyst job description

Job overview

The compensation analyst is responsible for designing, implementing, and evaluating compensation programs across the organization and providing competitive compensation packages to all employees. 

They will work closely with HR business partners, compensation consultants, and program designers to analyze the impact of a wide range of compensation options. The compensation analyst will research current market practices, measure the effectiveness of existing plans, and evaluate current and future opportunities.

Role and responsibilities

  • Conducting job analyses to create a thorough understanding of all tasks and activities a job involves.
  • Analyzing a company’s remuneration structures and policies and implementing improvements.
  • Researching employee salaries, benefits, and total rewards in similar roles, organizations, and industries and recommending changes based on findings.
  • Conducting surveys, one-to-one interviews, and focus groups with employees and managers to document duties, responsibilities, and skills required for each position.
  • Collecting feedback on compensation-related issues through the above-mentioned research methods.
  • Collecting and analyzing data from market-based compensation surveys to determine market trends.
  • Preparing and presenting reports of job and compensation analysis.
  • Benchmarking jobs against data collected and market intelligence to determine competitive compensation for each role.
  • Preparing and maintaining job classifications and salary scales.
  • Evaluating and implementing job analysis tools, techniques, and materials.
  • Conducting data on employee productivity and cost analyses for use in employee negotiations and bargaining agreements.
  • Liaising with insurance brokers and investment planners to create competitive benefits packages for the company and facilitating enrolment for insurance and retirement plans.
  • Planning and communicating best practices for evaluating and compensating employees.
  • Researching and advising on relevant state and federal laws to ensure the organization remains compliant with its compensation policies.
  • Update employee roles and pay into the system as and when required

Skills and qualifications

Required skills & knowledge:

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  • HR policy administration
  • Benchmarking
  • Data literacy and analysis
  • Market pricing
  • Salary planning and program administration
  • Compensation budget modeling
  • Job evaluation
  • Compensation program design
  • Quantitative and qualitative research methods
  • Strong written and verbal communications
  • Finance or accounting
  • Use of HR software
  • Microsoft Access, Excel, Office, PowerPoint & Outlook
  • Leadership
  • Organization and time management

Required qualifications:

How to become a compensation analyst

If you have an interest in research and data analysis, finance, and HR, the role of a compensation analyst might be a great career option for you. Let’s have a look at how you can land a compensation analyst position.

1. Gain experience in HR and/or finance

A compensation analyst role typically requires candidates to hold a Bachelor’s degree (either in HR or a related field). This provides a solid foundation through courses in business administration, finance, accounting, psychology, and HR. However, more and more companies are dropping the degree requirement, focusing on candidates’ skills and experience instead.

Some direct experience within HR or finance through an internship or entry-level administrative role is also usually required. Financial acumen is important when conducting compensation analysis since it requires an understanding of metrics, including earnings per share, revenue, net income, and stock index. 

An entry-level HR position provides the practical experience needed to learn the basics of an organization’s salary structure design. It will also help you familiarize yourself with HR processes, policies, and planning.

2. Get a certification

If you want to stand out from the crowd and deepen your knowledge and skills, consider getting general HR credentials or a dedicated Compensation and Benefits certification. The compensation and benefits landscape is constantly changing, which means that strategies that worked a few years ago will no longer ensure your organization is compliant and competitive now and in the future. Getting certified will help learn everything you need to know about creating a future-proof C&B strategy.

Another option is to get a People Analytics certification. A certificate program will equip you with statistics and analytical skills, and knowledge of data-driven HR practices. What’s more, it will serve as proof of your competencies when applying for jobs.

Certification is not typically a requirement for the role. However, it will certainly help you differentiate yourself from other candidates and provide you with the skills and confidence you need to perform at work.

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3. Hone your research skills

Strong research skills are essential if you hope to thrive in your role as a compensation analyst. Researching is one of the primary skills needed in this position, as you will be required to gather multiple data sources both within and outside your organization.

Whether it’s conducting surveys and interviews with employees or collecting market data and workforce trends, you must know where to look for the information you need and be well-versed in the best method to collect and analyze it.

4. Develop legal knowledge

A large part of your role as a compensation analyst is to be on top of ever-changing local, state, and federal laws and regulations regarding compensation and pay equity. This includes the FLSA, Equal Pay Act, ADA, minimum wage requirements, overtime regulations, and more.

Develop your legal knowledge and ensure you’re aware of when new laws are passed. That way, you can accurately advise your organization on compensation policies and if you need to make any changes.

5. Continuously work on your data and technology competencies

Compensation analysis requires the use of Excel and different types of compensation analysis software to analyze internal and external data relating to salary, benefits, and competitiveness. It’s also beneficial to have knowledge of Structured Query Language (SQL) to manage databases and work with the data in them.

The ability to read, understand, interpret and apply data in your organization is vital and will help you demonstrate to an employer how effective you can be in your role. 

Digital dexterity and data literacy are already a crucial part of the new standard for all HR professionals. These competencies help you achieve business objectives and drive business value and are essential for the future HR workforce.

Compensation analyst salary

Salaries for a compensation analyst will vary depending on the location of the position and the years of experience you bring with you.

According to Payscale, the average annual base salary for a compensation analyst in the U.S is $65,972, while Glassdoor states the average is slightly higher at US$72,758.

Over to you

Gaining a thorough understanding of the compensation analyst role, its responsibilities, and what skills, competencies, and qualifications you need will help you prepare for future interviews and obtain the role you want.

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