Qualities of a Compensation Analyst

Compensation analysts are responsible for establishing pay rates.
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A compensation analyst is an integral member of the human resources department specializing in helping employers establish competitive pay scales. In addition to creating base pay rates and salary structures, an analyst may also be involved in designing sales, management and other types of incentive compensation. Professionals in this field must maintain a high degree of objectivity, possess superior analytical skills, and have the ability to manage a company’s pay program according to legal guidelines.

Discretion and Objectivity

    Due to the nature of the profession, compensation analysts handle very sensitive data. An important characteristic for an individual, who typically is privy to the salaries of all employees including the senior management team, is discretion. Protecting the confidentiality of pay scales both within and outside of the workplace is a necessity. Additionally, maintaining a high degree of objectivity is another essential attribute. When creating salary ranges and incentive compensation vehicles, the analyst must separate the employee from the job.

Accuracy in Analysis

    Salary survey participation is a core responsibility for individuals in this profession. Analysts decide which surveys are appropriate for the business. Data gleaned from industry surveys is used to determine the “going rate” for specific jobs. Matching survey job descriptions to in-house positions requires careful attention to detail and precise judgment. Jobs are not matched to titles. Doing so distorts the data. Accurate matching depends on a substantial likeness to the duties performed. When survey results are published, compensation professionals must accurately analyze the data by using mathematical modeling and creating regression analysis charts to determine competitive benchmarks.


    On an annual basis, after statistically analyzing the salary survey data, it is the responsibility of the analyst to spot trends and assess the company’s position relative to the competitive market. Based on a company’s pay philosophy, the compensation practitioner may make various recommendations to management. For example, if a company strategy is to hire employees above market rate, the analyst might advise increases to the annual salary budget. A professional in this position must have the confidence that her analysis is highly accurate as compensation decisions heavily impact a company’s bottom line.


    Employment in any area of the HR function requires that professionals stay current regarding federal, state and local laws and regulations. Damaging lawsuits and fines not only affect a company financially, but can severely damage an employer’s reputation. The importance of business integrity ranks high on the list of a successful compensation analyst. Understanding such factors as job classifications and how to treat contract labor using the guidelines established by the Fair Labor Standards Act is a core responsibility for an analyst. When audits performed on the compensation structure reveal any inconsistencies on how employees are paid, the analyst’s job is to raise the red flag to management and remedy these situations.

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