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Craft a Compensation Philosophy

Lay the groundwork for compensation that is competitive, cost effective, and brand aligned.

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  • Diana Holec, Senior Associate, Performance, Reward & Training, Aon Hewitt
  • Jackson Lynch, President and Founder of 90 Consulting
  • Jason Rowe, Manager of Survey Services, American Society of Employers
  • Kent Flint, Chief Operating Officer, Real Estate Webmasters
  • Kristen Cifolelli, Director, Research Services, American Society of Employers
  • Megan Graham, Senior HR Advisor, Ross Video
  • Melanie Hall, Job Evaluation Analyst, London Health Sciences Centre
  • Michelle Edwards, Global Director, Total Rewards and Organizational Effectiveness, Agnico Eagle Mines Limited
  • Randy Ross, Regional Compensation Specialist, Danfoss Group
  • Syma Khan, Senior Manager, Compensation, Loblaw Companies Limited
  • Compensation is typically the number one operational cost in organizations, yet few of them have plans in place to properly direct and control this expenditure.
  • Many organizations experience an inconsistent application of compensation programs due to a missing or outdated compensation philosophy, resulting in internal and external inequities.

Our Advice

Critical Insight

  • The compensation philosophy should be primarily driven by business strategy and support the achievement of strategic objectives.
  • A compensation philosophy provides decision makers with guidance to ensure that compensation practices are consistent and aligned across the organization.

Impact and Result

  • A well-designed compensation philosophy clearly articulates the organization’s high-level approach to pay for each of its employee segments, including its target competitive position.
  • There are both internal and external factors that influence compensation, and these factors need to be explored to develop a compensation philosophy that fits your organization’s context.
  • McLean & Company’s core elements of a compensation philosophy will help you create employee segment plans that are legal, culturally aligned, and designed to support organizational goals.

Research & Tools

1. Explore internal and external factors influencing compensation

Gather data and information on various factors, which will guide decisions in the following step.

2. Draft a compensation philosophy

Develop a compensation philosophy that aligns with your organization’s strategy and competitive environment.

Guided Implementations

This guided implementation is a three call advisory process.

Call #1 - Explore internal and external factors influencing compensation.
Call #2 - Examine potential compensation principles and market positioning.
Call #3 - Review drafted compensation philosophy.

Onsite Workshop

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Module 1: Explore Internal and External Factors Influencing Compensation

The Purpose

Discuss challenges, explore internal and external factors influencing compensation, and identify competitors for talent.

Key Benefits Achieved

Use McLean & Company’s process to create a competitive, cost-effective, and brand-aligned compensation philosophy.




Identify and discuss compensation challenges.

  • Compensation challenges identified.

Discuss internal and external factors influencing compensation.

  • Factors influencing compensation analyzed.

Identify competitors for talent.

  • Competitors for talent identified.

Module 2: Draft a Compensation Philosophy

The Purpose

Determine high-level needs for compensation philosophy and prepare a draft.

Key Benefits Achieved

A drafted compensation philosophy for your organization will be prepared.




Uncover fundamental compensation principles.

  • Compensation principles determined.

Determine general market positioning.

  • Market position defined and understood.

Select market positioning strategies and targets.

  • Market positions determined for each employee segment.

Draft the compensation philosophy.

  • Compensation philosophy is crafted.