Compensation strategyinsights and resources

Compensation strategy is how an organization approaches pay to attract, motivate, and retain talent aligned with business goals and market conditions. Compensation strategy encompasses pay philosophy, pay structures, pay differentials, pay increases, and other aspects of compensation management.

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Frequently asked questions about compensation strategy

How many organizations have a formal compensation strategy today, and is that number growing?

61% of organizations say they have a compensation strategy, which is an 8% increase since 2024 and rises to 73% for Payscale customers.

Which pay structure are organizations most likely to adopt—traditional pay grades or job-based pay ranges?

While traditional pay grades are the most used pay structure today (66%), job-based pay ranges are most popular when combining current and future targets (44%).

How many organizations have a formal process for where employees land in the pay band and how they move up over time?

55% of organizations have a formal process for determining where employees fall in the pay band and how they progress up the pay band.