When developing a compensation strategy, it is important to consider Where an organization is in terms of its business cycle. For example, a new start, a high growth company, a mature and stable company, or a declining company.

It’s also important to consider relationship of pay to performance.

Pay mix such as the level of fixed pay versus variable pay.

Current pay market position versus desired market position.

Extent of competition for talent, especially those hard to fill critical positions.

Turnover and retention.

Internal equity.

Legislative and regulatory requirements.

Cost and funding.

Administration and technology available to support compensation administration.

And finally, communication.