A Compensation and Benefits Manager is a human resources (HR) professional responsible for developing, managing, and optimizing an organization’s pay structure and employee benefits strategies.
These professionals ensure fair, equitable, and competitive compensation while complying with labor laws. They also administer benefits and incentive programs to attract and retain top talent for their organizations.
Key responsibilities of a compensation and benefits manager
Salary benchmarking and market analysis
Compensation and benefits managers conduct compensation research and surveys, also known as benchmarking, to ensure competitive pay structures for employees. According to a report by the ADP Research Institute, benchmarking is viewed by current and potential employees as a “commitment to fair pay.” The same ADP report found that “workers who believe their pay is fair are 2.8x more likely to recommend their employer to friends and family as a place to work than employees who feel underpaid.”
To accurately develop a salary for a role, compensation and benefits managers consider numerous factors, including the industry, geographic location and cost of living, and job responsibilities. They also develop pay scales, salary bands, and incentive plans that align with business objectives. In some jurisdictions, like California and New York, disclosing the pay range for a role in the job posting is mandatory.
What skills and qualifications are needed?
- Negotiation and benchmarking skills. Experience in structuring competitive salary and benefits packages.
Designing payroll and incentive programs, collaborating with HR leadership on workforce planning
Compensation and benefits managers collaborate with payroll, finance teams, and HR leadership to ensure that salary structures are commensurate with the organization’s financial goals. In partnership with these teams, they create bonus structures, performance-based incentives, and long-term retention packages. They work with executives across the company to develop salary structures that balance company goals and employee satisfaction.
For example, a compensation and benefits manager may determine when bonuses will be paid, what performance metrics determine them, and the bonus amounts. Leading financial institutions like Goldman Sachs are known for offering large year-end bonuses, determined by both the company’s and the individual’s overall performance. These bonuses are part of the bank’s talent acquisition and retention strategy.
What skills and qualifications are needed?
- Strategic thinking and decision-making. Ability to align compensation policies with business goals and employee retention strategies.
Managing employee benefits administration and total rewards strategy
Salary benchmarking is only one component of a compensation and benefits manager’s job. They also design and manage health insurance offerings, retirement plans, stock options, and wellness programs. This work involves evaluating and improving benefit offerings based on employee needs and industry standards.
For example, in the case of health insurance, a compensation and benefits manager may alert employees to enrollment periods, answer employees’ questions about the offering, liaise with health insurance companies, and ensure that the offerings remain compliant with the law.
What skills and qualifications are needed?
- Communication skills. Ability to effectively interact with employees, management, and external parties to administer benefits.
Complying with compensation and employment laws
Compensation and benefits managers ensure that an organization complies with regulations. They must stay updated on local, national, and international regulations, such as minimum wage laws, overtime requirements, benefits administration standards, anti-discrimination laws, and data privacy laws.
These managers help the company comply with applicable regulations, protect the organization from legal risks, and ensure that employees are treated fairly across regions and jurisdictions. For example, companies doing business in the EU must adhere to Article 153 of the Treaty on the Functioning of the EU, which “sets minimum requirements for working and employment conditions” and “informs and consults workers.” They must also follow national guidelines that may be more detailed than the EU’s sweeping regulations.
In addition, compensation and benefits managers conduct pay equity analyses to identify and address any disparities in compensation, ensuring that employees are paid fairly regardless of gender, race, or ethnicity. They also conduct regular internal audits to ensure their compensation strategies align with evolving legal standards and ethical guidelines.
What skills and qualifications are needed?
- HR compliance and employment law knowledge. Expertise in wage laws, equal pay regulations, and tax implications for benefits.
Using data to track workforce trends
Compensation and benefits managers rely on data analytics to track and respond to workforce trends, such as talent retention rates, onboarding costs, and employee engagement. They analyze salary benchmarks, industry compensation reports, internal pay structures, and other data points to identify trends and potential illegal pay gaps across gender, race, and other demographics. In the U.S., women still earn less than men for the same work, so a compensation and benefits manager would strive to locate and eliminate these gender-related pay gaps within their company.
These managers can make informed decisions about compensation strategies by examining metrics such as market compensation rates, employee engagement surveys, and retention data. This data-driven approach helps organizations address pay equity issues, align compensation with market standards, and tailor benefits to enhance employee satisfaction and retention.
What skills and qualifications are needed?
- Data analysis and financial acumen. Ability to analyze compensation trends, budget salaries, and forecast payroll expenses.
- Knowledge of HR technology and payroll systems. Proficiency in human resource information system (HRIS) platforms, compensation management tools, and payroll software.
Compensation and benefits manager vs. other HR roles
HR Generalists work in small to mid-sized companies, handling virtually all HR tasks that cross their desk. Compensation and benefits managers are found in larger organizations, often multinational ones, where they specialize in salary structures, benefits, and total rewards.
Compensation and benefits managers are different from Payroll Managers. Payroll managers focus on processing employee pay and remaining compliant with payroll laws. Compensation and benefits managers are not involved with the day-to-day running of payroll; instead, they design compensation strategies and optimize benefits offerings.
FAQs
What does a compensation and benefits manager do?
To attract and retain employees, they develop and manage global compensation, including salary structures, benefits programs, and total rewards strategies.
What skills are needed to be a compensation and benefits manager?
Key skills needed include:
- Data analysis
- Financial planning
- Ability to apply HR compliance knowledge to specific workplace situations
- Ability to negotiate
- Strategic compensation management
How is this role different from an HR generalist?
HR generalists manage day-to-day HR operations, while compensation and benefits managers focus exclusively on pay structures and benefits strategies.
Why is compensation and benefits management important?
Competitive compensation improves employee satisfaction, retention, and overall business performance.
What industries need compensation and benefits managers?
High-demand industries include healthcare, finance, technology, and manufacturing.
What are the preferred certifications for compensation and benefits managers?
Certifications demonstrate to employers a commitment to the HR profession and advanced knowledge and skills.
Preferred certifications for compensation and benefits managers are WorldatWork’s Certified Compensation Professional (CCP), the Society for Human Resource Management’s Senior Certified Professional (SHRM-SCP), and the HR Certification Institute’s Professional in Human Resources (PHR).
Compensation and benefits matter—everywhere
Offering robust compensation and benefits to talent helps attract and retain employees, regardless of where they work.
Organizations looking to expand into foreign markets may concentrate on creating appealing compensation and benefits packages instead of using limited resources to establish a legal entity. They can partner with a global employer of record (EOR) to manage the administrative and compliance responsibilities related to HR in 185+ countries. Get in touch to learn more.
