Environments of Compensation and Benefits Administration

Employer Labor Market Classification

Employing organizations may be classified in varying ways.

There are 4 different basic types: private profit-seeking organizations, publicly owned for-profit organizations, not-for-profit organizations, and government entities. This classification seems to result in smaller differences in employment practices over time.

Organization size is measured in several ways: number of employees, amount of revenue, market capitalization, and so on. Generally, there are significant pay differences between large organizations and small organizations.

The two largest economic sectors in the U.S. by workforce are industry and services. Services represent about 79% of the workforce and industry about 19%. Manufacturing employment continues to face pressure from automation, global competition, and offshoring to non-U.S. locations. Artificial intelligence (AI) will also have an impact on jobs across sectors.

There are also differences resulting from the location of employing organizations. These differences stem from the region of the country, size of the communities, cost of living, size of the labor force, availability of jobs, education level, available skills, transportation, and even weather. Pay levels can differ widely depending on the location.

Employee Labor Market Classification

Employees differ by occupation, skill level, education level, experience level, and level of responsibility.

These differences affect the compensation employees are willing to accept, their reward preferences, and their views about what they contribute to the organization.