To make a compensation system that is internally consistent and market-competitive is a very large challenge and in my opinion almost impossible. This is due to the fact that with higher-up positions people can bring many different skills to the table and compensation can reflect differently based on what the person feels they deserve and what types of benefits they value more. However, when talking about benchmark jobs most of these compensation packages are the same since they are usually more entry-level positions.
One of the challenges of making an efficient compensation system is the kind of motivation that people respond to. This can be tricky sometimes because people have different priorities and finding a good match to those priorities that will push them towards putting hard quality work instead of just going with the motions and not being engaged with the work.
Another challenge that this concept faces is the work that goes into monitoring and researching the balance between internal consistency and market competitiveness. The market is always changing and depending on the strategy that the company pursues will determine how the company sets its compensation packages. Which will alter the market competitiveness as well. Keeping up with these changes takes a lot of time and money which begs the question of if it is worth it or not.
References:
Swift, M. (2021). Introduction to Compensation [Lecture recording]. Canvas@Oregon State University. http://canvas.oregonstate.edu/courses/1842591/pages/week-4-learning-materials
