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Compensation Analyst Interview Questions

by Julie Davoren

A compensation analyst’s main objective is to develop, coordinate and implement compensation strategies and programs. They develop components of pay and reward programs such as base pay, bonuses and incentives. They also help develop recognition programs. To maintain competitive positioning in the marketplace, they conduct salary surveys and interpret and analyze the results. They usually work in the personnel or human resources department and often guide management on compensation-related problems.

Task-Related Question

Know the responsibilities and job specifics in the company. Besides specializing in employee salaries, compensation analysts also conduct job market analyses. You must be knowledgeable about general job market trends, particularly regarding salaries and benefits. Hiring managers might ask you questions about the required skills and abilities of compensation analysts. In response, discuss your strong problem-solving skills, leadership skills, and communication and presentation skills. They also might ask you to discuss how you deal with or control common mistakes in the field. Talk about issues for which you have a solution. For example, sometimes compensation analysts reuse the same plan for all situations. Discuss how you would adjust your plan for the company and the situation.

Technical Knowledge

Become familiar with the terms frequently used in the field because you’ll need to answer questions about these key terms. Vouching, for example, means financial auditing and is a popular technical term in this field. You’ll likely discuss payroll systems such as salaries, bonuses, overtime pay, payroll taxes and costs, and employer-paid benefits such as vacations, holiday pay, sick days, retirement plans and profit-sharing plans. You must be aware of the common methods used in paying an employee, such as hourly wages, salary and commissions. Familiarize yourself with legislation that relates to insurance and pension claims and other allowances. Also be ready to discuss factors that influence compensation packages, including the employee’s performance and experience, job evaluation and requirements and the organization’s strategy and ability to pay.

Previous Experience

Interviewers will be keen to know how you responded in certain situations in your previous jobs. This helps them predict your future work behavior. They might ask you to detail how you identified and implemented appropriate employee pension, insurance, and savings plans. It will be helpful if you provide and describe an occupational classification, job description and salary scale that you developed. Identify its strengths and weaknesses. If based on your recommendation, change in employee benefit, health or safety practice produced a good outcome, make sure you describe the situation in detail.

Situational Questions

Employers use situational questions to see if you can apply theory to reality. They might give you a specific business scenario in which you have to create, test or refine compensation plans for employees. They might also present the company’s current compensation-related issues and ask you to provide strategies and recommendations to address the problems. For example, you might need to discuss your response if an employee wants a promotion to a higher grade but past performance does not justify the promotion. Be sure to include your plans for if the employee threatens to quit.

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