The two key questions that must be addressed in designing any compensation system are: a)What role should each of the three compensation components play in the compensation mix? and b)What total level of compensation should be provided?

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These two questions are fundamental in designing a compensation system as they address the structure of the compensation (i.e., the mix of base pay, incentives, and benefits) and the overall competitiveness or level of the compensation package in relation to the market or industry standards.

The Two Key Questions That Must Be Addressed in Designing