Compensation policy choices pertain to pay level and compliance with legislation.

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A compensation policy refers to choices that compensation professionals make to promote competitive advantage.Broadly,policy choices are made about pay level and pay mix.Pay level compensation policies determine whether the company will be a pay leader,be a pay follower,or strive for an average position in the labor market.Pay level policies have the greatest impact on attracting and retaining employees.Pay mix policies refer to the combination of direct and indirect financial compensation and employee benefits components (see Figure 9-1)that make up an employee's compensation package.

Compensation Policy Choices Pertain to Pay Level and Compliance with Legislation