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Compensation Audit

Compensation Audit

A compensation audit is a comprehensive review of an organization’s pay philosophy and strategy and associated compensation practices. The goal is to ensure that the organization’s compensation practices are aligned with their philosophy and strategy, and that they are fair, equitable, and compliant with relevant laws and regulations.

During a compensation audit, the organization’s compensation policies, procedures, and practices are reviewed and analyzed to identify any areas of concern or potential risk. The audit may also include a review of employee data, although not usually to the extent of recommending changes to programs. 

Companies value a Compensation Audit because:

  • Competitive compensation is a powerful tool for attracting top talent. When companies conduct audits, they can adjust their compensation strategies to align with industry standards and attract skilled professionals.
  • It ensures that pay practices are fair and equitable. By examining how employees are compensated, companies can identify any discrepancies or inequalities among individuals performing similar work.
  • Compensation is not just about numbers; it reflects a company’s values and priorities. An audit ensures that compensation aligns with the organization’s overall strategy and culture.
  • Ensuring compliance with labor laws and regulations is crucial. A compensation audit also helps identify any potential legal risks related to pay practices, allowing companies to address them proactively.

Our experience in Compensation Audits includes:

  • Deep-dive into employee data to determine if the company’s variable pay plan practices were aligned with intent.
  • Recommendations for development of a new job architecture to help reduce turnover amongst professional and technical employees.
  • Recommendations for changes to promotion and early career salary adjustments thus improving retention of new hires.
  • Finally, reviewing HR strategies and objectives along with current compensation programs and practices to develop a phased approach to change.

Our Compensation Audits are conducted by Senior and Senior Staff Consultants and overseen by a Managing Partner.  We’ll work with you to determine exactly what the scope of work would be and ensure your specific concerns are addressed in the process.  Each audit is customized to the individual client. Additionally, by hiring Alliance Compensation you have an actionable framework with a timeline to execute your priorities and make a business case to better align your compensation programs and policies.

A Compensation Audit can result in utilization of any of our Services. See all services at https://alliancecompensation.com/services/. View related testimonials at Home – Alliance Compensation. Contact Nancy Ellington for more information, Our Team | Alliance Compensation. Finally, here are links to related topics in our Blogs: Why Should You Conduct a Compensation Audit; Think Outside the Box; Follow the Leader.

compensation audit

Why Should You Conduct a Compensation Audit?

Why Should You Conduct a Compensation Audit?

As an HR or Compensation Leader, are you confident that your organization is paying employees fairly for their work? Are you sure your company is complying with labor laws and regulations? Are your compensation offerings competitive to attract, motivate and retain talent? If you have any uncertainties to these questions, then a compensation audit should be performed which will serve several crucial purposes.

Objectives

  1. Equity and Fairness: Firstly, a compensation audit ensures that pay practices are fair and equitable. By examining how employees are compensated, companies can identify any discrepancies or inequalities among individuals performing similar work.
  2. Attracting Talent: Competitive compensation is a powerful tool for attracting top talent. When companies conduct audits, they can adjust their compensation strategies to align with industry standards and attract skilled professionals.
  3. Reducing Turnover: Fair pay contributes to employee retention. When employees feel valued and adequately compensated, they are less likely to seek opportunities elsewhere. A compensation audit helps address any discrepancies that might lead to turnover.
  4. Enhancing Productivity: Properly compensated employees tend to be more engaged and productive. Additionally, by evaluating compensation practices, companies can optimize pay structures to motivate and retain high-performing staff.
  5. Legal Compliance: Ensuring compliance with labor laws and regulations is crucial. A compensation audit helps identify any potential legal risks related to pay practices, allowing companies to address them proactively.
  6. Strategic Alignment: Compensation is not just about numbers; it reflects a company’s values and priorities. An audit ensures that compensation aligns with the organization’s overall strategy and culture.

Get Started!

Remember, fair and transparent compensation is not only a business necessity but also a reflection of an organization’s commitment to its employees and their well-being. Contact Alliance Compensation today to learn more about conducting a compensation audit for your organization.


Nancy Ellington is a Managing Partner with Alliance Compensation LLC, a team of seasoned experts and trusted solution for clients across the US in public and private companies. She has over 30 years of experience in corporate leadership roles and consulting, and lives with her husband and two kids in Redmond, WA.

To read other blogs, go here: https://alliancecompensation.com/blog/. Our services related to this topic are Market Analysis, Salary Structures, Job Architecture, Pay Equity and Employee Pay Planning Tools.

To see our Linked-In company page, go here: https://www.linkedin.com/company/alliance-compensation-llc/about/.

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As an HR or Compensation Leader, are you confident that your organization is paying employees fairly for their work? Are you sure your company is complying with labor laws and regulations? Are your compensation offerings competitive to attract, motivate and retain talent? If you have any uncertainties to these questions, then a compensation audit should […]

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