What Does a Compensation Manager Do?

Learn About the Salary, Required Skills, & More

A day in the life of a compensation manager: Develop and evolve an organization’s pay scale and structure, Determine competitive wage rates and change as necessary, Ensure that the company’s pay scale complies with changing state and federal laws and regulations, Oversee the distribution of pay to employees

The Balance / Julie Bang

Compensation managers are responsible for researching, establishing, and maintaining a company's pay system. This involves researching and understanding the current and upcoming competitive markets for employee pay and benefits. A compensation manager must find ways to ensure that pay rates are fair and equitable in order to retain and recruit employees.

Compensation Manager Duties & Responsibilities

The job generally requires the ability to perform the following duties:

  • Develop and evolve an organization’s pay scale and structure
  • Determine competitive wage rates and change as necessary
  • Ensure that the company's pay scale complies with changing state and federal laws and regulations
  • Oversee the distribution of pay to employees
  • Work with managers to help develop promotion and retention strategies for existing employees
  • Develop a department budget and keep operations within that budget
  • Oversee compensation and payroll support team

A compensation manager's duties depend to some extent on the nature of the company they work for. In larger organizations, a compensation manager might specialize in specific areas such as job classification or market pay studies. They're often assisted by staff specialists.

It's the compensation manager's responsibility to see that the company's pay scale complies with ever-changing state and federal laws and regulations. Depending on the needs of the organization, compensation managers might oversee their company's performance evaluation system as well. They might handle employee benefits, as well as employee reward systems such as bonuses, merit raises, and pay-for-performance plans.

Compensation managers may work closely with individual managers as well as human resources business partners and the payroll department to ensure that raises are handled correctly and fairly.

Compensation Manager Salary

A compensation manager's salary can vary depending on location, experience, and employer.

  • Median Annual Salary: $121,010 
  • Top 10% Annual Salary: $205,470 
  • Bottom 10% Annual Salary: $70,560 

Education, Training, & Certification

Employers often seek a mix of education and relative experience for compensation managers. Certification is usually optional.

  • Education: This position generally requires a four-year bachelor's degree with a major in a related field, such as economics, accounting, or human resources.
  • Experience: Employers often prefer or require previous experience in a human resources or finance department or in a similar occupation.
  • Certification: This isn't required, but it can help boost your chances of getting a job. Certification options for compensation managers are plentiful, and they include the Certified Compensation Professional® program from WorldatWork and the Certified Compensation and Benefits Manager® program from the Human Resource Management Institute.

Compensation Manager Skills & Competencies

To be successful in this role, you’ll generally need the following skills and qualities: 

  • Communication skills: Compensation managers must be able to effectively talk and write about a company's pay strategy and system and address any concerns that come from executives and employees.
  • Analytical skills: People in this position must be able to collect, weigh, and analyze data on many factors to determine the best compensation plan for a company.
  • Mathematical skills: Calculating compensation can be complicated and requires solid working knowledge of math and statistics.

Job Outlook

The U.S. Bureau of Labor Statistics (BLS) projects that employment in this field will grow 5 percent through 2026, which is slightly slower than the overall employment growth of 7 percent for all occupations in the country.

Work Environment

Compensation managers can work in almost every industry, and they usually work in an office. The role is often seen as vital to employee retention in business because they're responsible for making pay competitive, fair, legal, and rewarding. Because of this, the job can be somewhat stressful at times.

Work Schedule

Most compensation managers work full time during regular business hours, and according to the BLS, about one in 3 people in this position work more than 30 hours per week.

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Source: U.S. Bureau of Labor Statistics, 2018