Universal Compensable Factors, Hay Factors and Dimensions

Employee Compensation (Pay Structure)
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Munadil Shafat
Student (MBA), Bangladesh

Universal Compensable Factors, Hay Factors and Dimensions

Compensable factors simply refer to the factors of a job for which a company is willing to pay. Different types of job may contain different compensable factors. But there are Universal Compensable Factors that exist in almost any jobs we see around. As you may know, identifying compensable factors is a crucial step in job evaluation process. There are 4 universal compensable factors i.e. Skills, Responsibilities, Efforts and Working Conditions. In this post, I will go through each of the universal compensable factors and will elaborate the list (Note: it is not an exhaustive list):

1. Skills:
  • Technical skills and certification
  • Work experience
  • Verbal and written skills
  • Problem solving skills
  • Education
  • Interpersonal skills e.g. leadership skills etc.
2. Responsibilities:
  • Managerial responsibilities
  • Impact on end results
  • Financial responsibilities
  • Scope of the job
  • Impact of absence
3. Efforts:
  • Complexity of tasks
  • Diversity of tasks
  • Creative and analytical thinking requirements
  • Availability of asistance
4. Working Conditions:
  • Exposure to potential hazards/health risks
  • Remote location
  • Extent to deal with VUCA (a situation characterized by Volatility, Uncertainty, Complexity, Ambiguity)
The above are commonly known as Universal Compensable Factors.
Yet, various commercial organizations have introduced their own set of compensable factors.

One of them was the Hay Group who developed the "Hay Guide Chart". Hay is now part of Korn Ferry, hence the charts are now also referred to as: "Korn Ferry Hay Guide Charts". The Guide Chart Profile Method (their proprietary point-factor job evaluation system) starts with 3 factors (each sub-divided into "dimensions"), briefly summarized below:
  1. Accountability: Value each role adds to the organization.
    • Freedom to act
    • Magnitude
    • Impact
  2. Problem Solving: Challenges that need to overcome in order to deliver that value
    • Thinking Environment
    • Thinking Challenge
  3. Know-how: Knowledge, Skills, Experience required to make all these happen.
    • Practical and technical knowledge
    • Planning and organising skills
    • Communicating and influencing skills
I tried to make the list a comprehensive one by integrating lots of articles, books, and other sources. I hope it will be helpful. Will be happy to see your reactions!

Jeff Stinson (2012), "A Practical Guide to Human Resources Management", Page:101-102
Jeffrey A. Mello (2014), "Strategic Human Resource Management", Cengage Learning, Page:495


David Wilson
Manager, Canada

Developing Compensable Factors

Hi Munadil Shafat, I agree with your list of the four pay equity categories. However, the factors wi... Sign up

Munadil Shafat
Student (MBA), Bangladesh

Adaptive Compensation Factors

@David Wilson: Sorry for the late response. I completely agree with you on the points you mentioned ... Sign up

David Wilson
Manager, Canada

Practical Know-How on Developing Compensable Factors

Hi Munadil: There are lots of books, but sometimes the theory can be hard to apply. The system sh... Sign up

Munadil Shafat
Student (MBA), Bangladesh

Professor Assistance on Implementing a Pay Structure

@David Wilson: The know-how you shared is wonderful. I'm very grateful that you took the time to sha... Sign up

David Wilson
Manager, Canada

Try a Local or National HR Compensation Professional

@Munadil Shafat: Perhaps you can find a local or national company where you live and ask one of thei... Sign up


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