Who owns compensation policy and compensation components?

The compensation policy is not a document purely in hands of Human Resources. HR is not the owner of the compensation policy. The policy is very expensive and the top management is the key client.

The compensation policy and the compensation components help to form the organization and they play a major role in the definition of the typical member of the organization. That is the main reason, the top management should be fully involved in the definition of the compensation strategy and the compensation policy.

The compensation policy has to be defined by the top management in general as they are owners of the overall compensation in the organization. The top management should also define the roles and responsibilities of other units and managers in the individual compensation components.

The base salaries are usually owned by Human Resources and the top management make decisions. HR monitors the market and it provides the top management with the data and analysis about the costs of the alignment with the external market.

The bonuses and incentives are owned by the top management as the compensation component, but the managers define the content to achieve the goals. The managers are responsible for the efficient use of the bonuses and incentives and Human Resources is responsible for the monitoring.

The benefits are the domain of Human Resources and the management. The managers can propose the introduction of new benefits and Human Resources decides about the introduction and the costs of the new benefit in the organization.