One of the first steps in developing a compensation plan is:
A) to carry out a pay review and present it to the newly hired employees.
B) to track employee performance.
C) to determine whether hiring is to be done for an hourly or salaried position.
D) to pay an above-market salary to create loyalty.

Question

Quizplus · Accepted Answer

Determining whether a position will be paid hourly or salaried is a fundamental aspect of developing a compensation plan as it will affect the basis for calculating pay for that position. This decision helps ensure consistency in how pay is determined across the organization. Pay review and performance tracking are important steps in determining the compensation plan, but they come later in the process. Paying an above-market salary may not be sustainable in the long term and may not necessarily create loyalty.

One of the First Steps in Developing a Compensation Plan