Classification & Compensation Studies

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A public sector organization must examine its compensation philosophy to ensure it can successfully compete for existing and future employees. Classification and compensation studies review internal equity (pay relationships between positions) and external competitiveness (pay relationships with labor market competitors). This helps public sector organizations achieve human resources objectives such as employee recruitment, retention, pay satisfaction and containing labor costs.


Classification and compensation plans group positions on the basis of a uniform criteria (i.e. job duties and knowledge requirements). It then allocates positions to salary grades that reflect their relative worth to the organization. Salary grades will have corresponding salary ranges that are aligned with the external labor market. A properly designed and maintained classification and compensation plan should create an administrative framework for a public sector organization to

  • receive fewer requests for reclassifications (i.e. change in position titles)

  • receive higher volume and quality of position applicants

  • receive fewer pay inequities and morale problems

  • pursue larger human resource management goals

  • establish position qualifications for recruitment and selection

  • establish lines of authority and areas of responsibility

  • establish a basis to evaluate work performance


Steps taken to develop a new classification plan generally include

  • on-site orientation sessions

  • detailed position description questionnaires

  • employee and management meetings

  • wage and salary surveys

  • presentation of recommendations to administrators and elected officials


Study deliverables usually include new job descriptions, position evaluation tools and a market competitive wage, and salary structure. Classification and compensation plans can be implemented in one fiscal year or over several fiscal years to alleviate cost concerns.