What Is a Compensation Manager? A Peek at the Pros Influencing Your Paycheck

You expected your exploration of new career possibilities to be an exciting time. But rather than being the adventure you expected, you’ve found yourself stuck in an endless scroll through stale job titles that don’t hold the appeal you’re looking for.

That is, until you came upon a career called “compensation manager.” Just the name intrigues you! You don’t know much about this human resources (HR) career, but it certainly sounds like compensation managers play an influential role in an organization—and overall employee satisfaction. Where can you sign up?

Before you jump headfirst into pursuing this HR position, you need a better understanding of what the role entails. What do compensation managers really do, and how can you know whether you’re a good fit for the job?

Look no further! We did the research and spoke with an expert in the field to bring you this detailed overview of a compensation manager career.

What do compensation managers do?

Compensation managers are part of an organization’s human resources team. Their role focuses on managing all aspects of employee compensation plans.

This includes determining wages that are fair and competitive for their company’s location and industry, and ensuring that their pay structure adheres to government regulations, according to the Bureau of Labor Statistics (BLS).1 Depending on the size of their organization, they may also supervise other members of their HR team, such as payroll specialists.

A compensation manager’s job may seem straightforward, but it has more of an impact than you might imagine. “This role affects the entire employee experience,” says certified mediator Michael Trust, “which in turn drives organizational productivity, profit, customer satisfaction and employee engagement.”

He adds that a compensation manager’s day-to-day work sets the organization’s compensation philosophy overall, making this HR position one that has a huge influence over the future of a company.

What are a compensation manager’s job duties?

You might have a mental image of a compensation manager painstakingly determining each employee’s salary, but that’s not the case. Much of a compensation manager’s daily work revolves around higher-level planning for their organization.

Compensation managers’ job duties include some of the following, according to Trust:

  • Writing detailed employee job descriptions to help determine their pay level
  • Conducting external pay studies to make sure salaries are competitive within their industry
  • Conducting internal pay studies to ensure there is no discrimination among employees’ pay rates
  • Researching and choosing pay structures
  • Staying up to date on compensation regulations
  • Budgeting for promotions and salary increases, including cost-of-living raises
  • Researching and determining the structure for alternative compensation plans, like commission or stock and equity options

Trust adds that some compensation managers are also in charge of “total rewards” programs, like benefits packages, health and wellness incentives, and monetary recognition awards. All of these job duties combine to make compensation managers a valuable part of organizations across all industries.

What types of skills do compensation managers need?

It comes as no surprise that professionals in this role spend a lot of time working with numbers, so aspiring compensation managers should be comfortable with basic business math, according to the BLS.1 It should come as no surprise that skills like the ability to put together a budget and understand business finances are essential in this career.

However, it’s not all about crunching numbers. Compensation managers aren’t always concerned with the cheapest option; they need to wisely select compensation plans that encourage employee satisfaction. Trust says compensation managers need an understanding of how compensation affects other parts of HR, which in turn affect employees and the overall organization. For example, does a bonus compensation program with aggressive goals or criteria actually motivate employees as intended or do those lofty goals become a source of frustration? Will that frustration result in a higher turnover rate and make it harder to recruit talented employees? As you can see, what might seem like a relatively small area of overall business operations can have large ripple effects if not implemented carefully. 

Because of this, compensation managers should also have strong decision-making skills as they’re often tasked with weighing different options and choosing the best fit for their company. And effectively communicating those decisions with others in the organization is key. Trust suggests that compensation managers should have “outstanding writing ability and excellent negotiation ability” for this reason.

How much do compensation managers earn?

Thinking about a compensation manager’s salary might feel like a bit of a brain-bender, but this is an important question to consider if you’re thinking about pursuing this career. The BLS reports that the median annual salary for compensation managers in 2018 was $121,010.1

Because compensation managers are needed in nearly every type of company, there is some fluctuation in salary depending on industry. The highest-paid industry is insurance carriers, where compensation managers earned a median annual salary of $130,420 per year in 2018.1 The lowest-paid industry is the government, coming in at a median annual salary of $102,470.1

As with most management positions, the overall number of compensation manager jobs will be fewer than that of a specialist—but the good news is that this role is projected to have a solid overall employment growth outlook. The BLS projects employment of compensation managers to grow by 5 percent through 2016—which they estimate translates to approximately 800 new compensation manager positions added from 2016 to 2026.1

How do you become a compensation manager?

There isn’t one straight-and-narrow path to becoming a compensation manager. However, the BLS shares that there are some basic education requirements that make for a good starting point. Most compensation managers require a business-related bachelor’s degree, especially one like human resources or business administration. To help you get a better feel for what employers are seeking, we used job posting analysis software to analyze over 11,000 compensation and benefits manager positions nationwide.

As you might expect, this position is not typically something a new graduate jumps directly into. Our analysis found just over 42 percent of all job postings were seeking candidates with 6 or more years of experience.2 As you can see, you’ll likely need several years of experience and strong performance in a specialist position to be considered.

Trust believes that most aspiring compensation managers should start out in an entry-level HR position, using their experience and growing knowledge of the industry to work their way up. “One should likely spend some time supervising others on this track, and also learn other parts of HR on at least a basic level to understand how compensation interacts with other parts of HR,” he says.

Certification is also an option for compensation managers who want further proof of their expertise, though this isn’t required in most states. “As HR overall becomes more and more complex, more and more organizations want both experience and relevant certifications,” Trust says. The Certified Compensation Professional (CCP)® credential is one popular option for professionals in this field to consider. Additionally, our job posting analysis indicates a master’s degree in HR or a related field may help your chances—just over 28 percent of all job postings indicate a preference for candidates with a master’s degree.2

Take the next step in your HR career

It’s not hard to see the appeal of a career as a compensation manager! Now that you know what the job entails, you can already picture yourself working in this pivotal HR role.

Daydreaming won’t land you a new career, though! Take action today and discover how a Bachelor’s degree in Human Resources could be your first step toward a career in compensation management.

1Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, [career information accessed August, 2019] www.bls.gov/ooh/. Information represents national, averaged data for the occupations listed and includes workers at all levels of education and experience. Employment conditions in your area may vary.
2Burning-Glass.com (analysis of 11,038 compensation manager job postings, August 1, 2018 – July 31, 2019)

Certified Compensation Professional is a registered trademark of WorldatWork.

About the author

Ashley Brooks

Ashley is a freelance writer for Collegis education who writes student-focused articles on behalf of Rasmussen University. She believes in the power of words and knowledge and enjoys using both to encourage others on their learning journeys

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