What is a compensation and benefits manager?

A compensation and benefits manager, payroll manager or reward manager, is a Human Resource specialist who oversees the finances related to an organization’s employees. At the most basic level, a compensation and benefits manager will be in charge of designing, developing, implementing, and managing salaries, bonuses, and benefits packages. This also involves managing retirement plans and pension schemes, health insurance, commission payments, and other employee benefits like company cars and cycle-to-work schemes.

What are compensation and benefits in Human Resource Management?

Compensation and benefits, or C&B, is the branch of Human Resources that handles the payment of employees and the provision of benefits. This includes determining how much an employee should be paid and deciding what benefits they should be offered at any given point. It also encompasses the administration involved with employee benefit programs, meaning that it covers the enrollment of employees on these programs and plans, communicating information about benefits to them, and processing claims.

A compensation and benefits manager is the person responsible for making sure all of this is done, achieving fair and accurate compensation for all employees.

What is Human Resource Management?

Human Resource Management, which you might also know as Human Resources, or HR, is the practice of recruiting, hiring, deploying, and managing employees. A company’s HR department will normally be responsible for creating, putting into effect, and overseeing the policies that guide and regulate its workforce. It’s also responsible for overseeing and managing the relationship an organization has with its employees in general. 

The role of a compensation and benefits manager

As part of their job description, and in collaboration with hiring managers, recruiters, and other personnel based in Human Resources, a compensation and benefits manager will be responsible for: 

Determining market rates

A compensation and benefits manager must evaluate every possible position within an organization and determine the right market value for that particular job. Salary surveys and statistical analysis can help them to do this, though the number reached is often not fixed. This is because every company is different and jobs and salaries vary from employee to employee. 

Job requirements such as education, years of experience needed, and specific schools can all help a manager to set a base number. When they later go to determine an offer for a specific person, they will need to consider the person’s actual education, years of experience, and the duties that will be involved with their work.

To give an example, a company might be looking to hire a marketing manager and find their ideal candidate is someone who has ten years of experience and ideas the company wishes to implement. Owing to their experience and overall value as an employee, the market rate for them would naturally be higher. The compensation and benefits manager would then adjust the offered salary accordingly.

Building pay bands

Because the value of a job is different, depending on who is carrying out the work and the skills that they have, many companies will use salary bands. These salaries have mid-points, and these are considered the market rate for the position they cover.

Evaluating jobs

In addition to salaries, jobs also sit within pay bands. Compensation and benefits managers assess job descriptions and assign them to specific job bands based on a set of criteria. Many different jobs within a company may be within the same job band, even if the duties and responsibilities themselves are different.

Monitoring internal equity & analytics

Compensation and benefits managers must ensure that pay is equitable internally. This means that, while salaries are negotiable, they will ensure that there are no vast differentiation between similarly situated peers and coworkers. This applies not only to employees with the same job title but to employees based across the entire organization. 

When they carry out this duty, compensation and benefits managers will also take note of differences in salary between employees of different races, genders, and ages. They will often also use regression analysis to make sure there are legitimate grounds for variances. Experience in the industry and level of education are two examples of why one employee may have a right to earn more than another, as are performance appraisals and the number of hours worked. Race and gender are not legitimate reasons for one employee earning less than another.

Building bonus structures

Two types of bonuses are available to employees. These are discretionary and non-discretionary. A non-discretionary bonus refers to the bonuses an employee can expect to receive, such as guaranteed production bonuses and sales bonuses. The amount or percentage is set by the company before the employee carries out the work. If the right conditions are met, the employee will then receive the bonus.

Discretionary bonuses, on the other hand, often vary based on a number of different factors. These factors include company and personal performance. Compensation and benefits managers develop these structures, working to ensure that both market criteria and internal equity are met.

Retirement plans

Both fixed contribution plans, such as 401ks, and fixed distribution plans, such as pensions, are managed by a compensation and benefits manager. These plans are created and managed with the help of attorneys, employee councils, unions, and vendors.

Health insurance

Companies which offer employees health insurance will determine the insurance plans and negotiate costs with insurance companies, usually through a health insurance broker. This is also a responsibility covered by a compensation and benefits manager.

Other benefits

This covers every other benefit that an employee could enjoy in their workplace. Whether a company offers snacks in the breakroom, more vacation days, or fun lunchtime activities, it is highly likely that these have been implemented by a compensation and benefits manager.

Benefits software

Compensation and benefits managers are also responsible for managing the relevant HR software. Software is a key enabler in creating a more flexible compensation and benefits structure and helps employees to make use of the benefits that will matter most to them. By tailoring benefits packages to individual demands, an organization is more likely to see a boost in employee morale and motivation.

Work schedules of a compensation and benefits manager

A compensation and benefits manager works full-time, typically working 40 hours per week. Some may be expected to work more than this during peak times, especially during their organization’s benefits enrollment period.

What education do compensation and benefits managers have?

To become a compensation and benefits manager, you will generally need a bachelor’s degree or a master’s degree in business or HR, and several years of experience working in Human Resources. The ideal candidate for this position will also have a strong background in finance and statistical analysis, as these are both crucial elements involved in working with salaries.

Candidates hoping to be accepted for this position should also have compensation certifications that demonstrate their capability in the field. Acceptable certifications include:

• Certified Employee Benefits Specialist
• Compensation Management Specialist
• Certified Compensation Professional

Broader Human Resource Certifications, like those offered by the Society for Human Resources Management (SHRM), the HR Certification Institute (HRCI), and certain online courses are not considered as specialized as the certifications listed above. However, they can provide a general knowledge of compensation and benefits as a whole.

What do compensation and benefits managers get paid?

As of May 2022, the average salary a compensation and benefits manager is expected to earn in the United States is $127,640. The broader pay range typically falls between $111,596 and $140,520, though it is possible to find salaries outside of this scale. How much any one individual will earn on this scale will typically depend on factors such as their education and certifications, years of experience, and additional skills.

What personality traits do compensation and benefits managers have?

As well as being able to do everything covered in the compensation and benefits manager job description and having at least some of the qualifications listed, a candidate will also need to display certain personality traits. They tend to be enterprising individuals, meaning that they will be:

• Adventurous
• Assertive
• Ambitious
• Confidence
• Energetic
• Enthusiastic
• Extroverted
• Optimistic

In order to succeed at their role, a compensation and benefits manager should also be persuasive and motivational, displaying leadership qualities, good communication skills, and the ability to make the best decisions for an organization’s growth.

Job prospects and outlook for compensation and benefits managers

As of 2020, there are estimated to be 18,700 people working as compensation and benefits managers in the United States. This is projected to grow 4 percent from 2020 to 2030, which is slower than average for all occupations according to the U.S. Bureau of Labor Statistics. 

Despite this limited growth in employment, an estimated average of 1,500 positions within compensation and benefits management are projected for each year over the decade. Most of these will be expected to fill roles left by workers moving to different occupations, or those who are retiring. 

The candidates who will fill these vacancies will be the ones who best match the descriptions discussed above, who have the qualifications listed, and who are best prepared to take on the responsibilities required of the role.