Compensation Management

Course Number: BUSADMIN 3100/5100
Course Name: Compensation Management (Online)
Course Description:    An exploration of the discipline of compensation management. The processes of job analysis and job evaluation are discussed as methods to determine internal pay equity. Market wage surveys are presented as tools to ensure external equity. Wage scale development and various employee benefit options are discussed. Other topics include wage and benefit related laws, performance appraisal, and motivation theories.
Prerequisites:    BUSADMIN 3030
Level: Undergraduate/Graduate
Credits: 3
Format: Online  (This course is also offered in print.)

Bachelor of Science in Business Administration
Bachelor of Science in Criminal Justice
Master of Science in Project Management

Registration Instructions

NOTE: The information below is representative of the course and is subject to change.  The specific details of the course will be available in the Desire2Learn course instance for the course in which a student registers.

Additional Information

Learning Outcomes

After completion of the course, you will be able to

  • Discuss the components of an organization's employee reward system and the effects of compensation on employees and organizations.
  • Develop job descriptions and job specifications from data gathered via job analysis.
  • Evaluate jobs using the ranking, classification, and Factor Evaluation System methods of job evaluation.
  • Develop a pay structure using raw data gathered via a compensation survey.
  • Explain the rationale for and methodology of using team-based and performance-based pay systems.
  • Discuss short-term and long-term incentive, and employee benefits and service options available to organizations.
  • Explain the options and rationales for compensation systems for various special employee groups such as executives and professionals.
  • Use the Fair Labor Standards Act to classify jobs by exemption status.

Unit Descriptions

Unit 1: Introduction to the Pay Model and Compensation Strategies
Unit 1 discusses compensation as a vital part of an organization's reward system and examines internal and external influences on this reward system. The unit provides an overview of the compensation system and emphasizes that compensation decisions are not made in a vacuum. Such decisions are affected by the nature of employees and their jobs; organizational features such as philosophy, size, structure, and location; and external factors such as legislation, competition, unionization, labor economics, and demographic influences.

Unit 1 also presents information on the concept of internal alignment (or internal equity) as it applies to compensation systems. This term refers to pay relationships within an organization and addresses the logic underlying these relationships. The relationships form a pay structure that should support the organization’s strategy and work flow and motivate behavior toward organizational objectives.

Unit 2: Job-Based Job Evaluation and Determining External Competitiveness
The process of job-based job evaluation uses job description/specification information to rank jobs according to their relative worth, or value, to an organization. Job-based job evaluation is concerned with ensuring internal equity, or the perceived fairness of pay for one job as compared to the pay for a different job within the same organization. It is one step in the quest to construct an equitable and legally defensible pay structure.

External competitiveness refers to the fairness of an organization's pay structure as compared to its competitors'. This is assessed via a review of economic theories in general and by analyzing compensation survey data. These topics are covered in detail in this unit.

Unit 3: Employee Contributions: Determining Individual Pay
Besides internal and external equity, an organization must be concerned about the pay one person receives as compared to the compensation of another individual doing the same job in the same firm. Why does one employee get paid more than another? Typically, the reasons are related to merit, seniority, or a combination of the two. Merit pay, which is also known as pay-for-performance, has become popular as a way to overcome the mind-set that all employees are entitled to an automatic pay raise each year. Pay-for-performance plans are also believed to increase productivity. The textbook examines the potential pitfalls and benefits of merit pay plans and discusses ways to motivate employees to their highest performance levels.

Performance appraisal systems also relate to employee equity. In many organizations, pay increases are tied to performance appraisal. Appraisal systems attempt to do this through a variety of methods that are discussed in Chapter 11 of the text.

Unit 4: Employee Benefits
Employee benefits are an important component of the total compensation package. Because these programs represent a substantial cost to employers, they must be designed properly and communicated effectively to employees. Unit 4 discusses how organizations can best do this.

Unit 4 also covers compensation issues for special groups such as executives and professionals. An organization’s executives are often compensated in different ways than its lower-level rank-and-file employees, so it is important to be aware of compensation options in order to enable your organization to recruit and retain the best employees.

Chapter 16 presents an overview of international compensation systems. Because many compensation managers design and administer pay systems for employees in worldwide locations, the concepts covered in this chapter are particularly important to review.

Chapter 17 discusses key pieces of federal legislation that affect compensation management. The Fair Labor Standards Act is presented in significant detail since non-compliance with its provisions can cause serious legal problems for compensation management professionals.

Finally, Chapter 18 discusses how all components of the course fit together to assure an optimum organizational compensation system.

Grading Information


Unit Exams (4 @ 50 pts. each) 200 points
Individual 269 points
Discussions 50 points
Team 40 points
Total: 559 points


Unit Exams (4 @ 50 pts. each) 200 points
Individual 269 points
Discussions 60 points
Team 40 points
Graduate Project 70 points
Total: 629 points

Grading Scale
A 90% - 100%
B 80% - 89%
C 70% - 79%
D 60% - 69%
F 0% - 59%