HR Mavericks

Eddy’s HR Mavericks Encyclopedia

Compensation Analyst
Employees who feel that there is clear communication about compensation and perceive their compensation to be fair are more engaged in their work. A compensation analyst can do just that: communicate clearly, advise management, and keep pay fair. Read on to learn more about a compensation analyst and their job duties.

What Is a Compensation Analyst?

A compensation analyst researches both internal and external salaries and benefits. With that data, they help decide the pay of a position, the company’s pay structure and compensation ranges, and when raises are warranted. External research monitors current compensation for similar positions in different organizations, stays aware of general labor market and salary trends, and helps the company stay competitive. A compensation analyst is part of the Human Resources department. However, they often work with company stakeholders and other departments, like finance, to create these structures and ensure legal compliance.

Responsibilities of a Compensation Analyst

A compensation analyst has many different responsibilities; common ones are listed below. In addition, the Society of Human Resources Management (SHRM) has a comprehensive list of responsibilities that are often seen on job postings for a compensation analyst.

Job Descriptions

Compensation analysts often create or help create job descriptions. This is to ensure that each description matches the exact tasks and requirements of the job, making pay comparisons more accurate. They do this by interviewing employees, talking to managers, and sometimes observing day-to-day tasks.

Market Comparisons

Compensation analysts spend time comparing internal jobs to the external market. This means looking at what other companies are offering and paying for similar job functions.

Build Pay Structure

After determining job roles and comparing market data, a compensation analyst builds a pay structure. Each job will have a pay range. Ranges vary based on tenure, experience, education, etc. A pay structure helps keep pay fair between job functions and experience.

Approve Pay Raises

A compensation analyst is often the one to approve a pay raise. They compare the proposed pay raise to the current pay structure, tenure, job function, and more to see if the employee is eligible and if the pay raise follows procedure.

Collect Data

Compensation analysts collect internal as well as external market data. This can be in regards to employee opinion and satisfaction, cost analysis, benefit analysis, and more.

Compliance Advice

There are many laws, policies, and regulations in regards to compensation and benefits. Compensation analysts advise management to ensure compliance.

When to Hire a Compensation Analyst

Even though a compensation analyst has a big role, it is not often considered a core job. Because of that, it is likely that your company does not have a specific role for a compensation analyst. Some companies spread those responsibilities amongst existing roles, while others forgo the valuable contributions such analysis provides. The points below discuss when it is best to hire a compensation analyst.

Struggle to Hire Talent

If you are struggling to hire talent, it may be because you aren’t paying competitively. Hiring a compensation analyst helps increase competitive pay, resulting in more applications and candidates.

Low Retention

If you have high turnover and low retention, it's possible you are not paying competitively. A compensation analyst can help figure out why people are unhappy with their compensation (whether salary, benefits, etc.) and make suggestions to keep employees happier.

Compensation Changes Lack Data

If your compensation changes (such as pay raises) are not based on data, then it would be beneficial to hire a compensation analyst. Compensation analysts keep consistency and fairness and ensure that all pay changes follow a procedure.

Your Company Can Afford It

If you are a small startup, it's possible you can’t afford a compensation analyst. If you only have a few employees, there is not as much of a demand. Having a compensation analyst becomes more beneficial the larger your company grows. If your company cannot afford a compensation analyst, it is still a good idea to ensure that someone is still paying attention to those details. Perhaps HR can learn the laws and a data scientist can help with performing compensation analyses. This will help keep your pay competitive without using too many resources.

How to Become a Compensation Analyst

Everyone’s path to becoming a compensation analyst will be different. Below are some things you can do to help you reach your goal. Keep in mind that this is not a checklist nor a chronological path that must be followed, but simply a few ideas that can help you become a compensation analyst.

Step 1: Earn a Bachelor’s Degree

The first step is to earn a bachelor’s degree or gain equivalent experience. Equivalent experience is two to five years, depending on the company and the level of the role. A bachelor’s degree in human resources, business, or data science are normally the best options.

Step 2: Get a Job in Human Resources

If you can’t get into compensation analytics right off the bat, getting a job in human resources is the next best step. It will allow you to familiarize yourself with areas of compensation and is the best path to move into a compensation analyst role.

Step 3: Gain Certifications

Another great way to prepare to be a compensation analyst is to gain certifications in regards to analytics and compensation. For example, eCornell offers a compensation studies certificate. The Economic Research Institute offers a Compensation Analyst Credential (CAC) for the purpose of career advancement.

Step 4: Develop Technical Skills

Being an analyst requires knowledge of many technical areas such as coding and data analytics. It is best to develop your skills in this area as soon as possible. Below we will cover specific skills that can benefit you for this position. There are a few great resources to help you learn more about compensation: Linkedin Learning, YouTube, Udemy, etc.

Necessary Skills for a Compensation Analyst

A compensation analyst uses many skills from HR to data analytics. Understanding what skills are most beneficial can help you know who will be a good fit as a compensation analyst. Technical skills can be learned in a variety of ways, placing a larger emphasis on the mindset skills listed below.

Technical Skills

Compensation analysts should have technical data skills, including both data analysis and data visualization. Common areas are coding languages (like SQL or R), Tableau or Power BI, Excel, HRIS systems, and more.

Analytic and Detail-Oriented

Because compensation analysts work with data for a majority of their job, they should be analytically minded and detail-oriented. Working with data requires a careful approach to problems. Detail will not only help with the technical skills, but also with recognizing small factors and changes that affect the areas of compensation.

Knowledge of Fair Labor Standards Act

A compensation analyst should know laws, regulations, and best HR practices. A common one to know in the Fair Labor Standards Act, which is essential knowledge when advising stakeholders and ensuring compliance.


A compensation analyst conducts a lot of research, both internal and external. They should be able to conduct their own research, such as surveys and data gathering, as well as reach conclusions and present results clearly.


Compensation analysts share results and provide advice. This requires good communication skills, both verbal and written. It will help them explain the situation and best help company decision-makers.
Katie Bahr

Katie Bahr

Katie is currently studying at BYU, with a HRM major and Statistics minor. She works there as an HR research assistant and also works as an HR Generalist at a local company, and both jobs provide her with a wide variety of experiences. Katie's passion lies in HR and People Analytics, where she can discover and use data to help everyone understand and improve the workplace for a universal benefit.
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Frequently asked questions
Other Related Terms
Associate Professional in Human Resources (aPHR)
Benefits Manager
Campus Recruiter
Certified Payroll Professional (CPP)
Chief Human Resources Officer (CHRO)
Employee Relations Manager
Executive Recruiter
Global Mobility Specialist
Global Professional in Human Resources (GPHR)
HR Burnout
HR Business Partner
HR Careers
HR Certifications
HR Consulting
HR Department of One
HR for Owners
Hiring Manager
Hiring Team
Human Resources Assistant
Human Resources Generalist
In-House Recruiter
Professional in Human Resources (PHR)
Recruiting Coordinator
Recruiting Manager
Senior Professional in Human Resources (SPHR)
Talent Acquisition Partner
Technical Recruiter
Training & Development Manager
Vice President of Human Resources
Work-Life Coordinator
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