The subject of this final work is paid in the Republic of Croatia. The salary is the amount of money the employer pays to the employee monthly or weekly for his work based on a concluded employment contract. The salary payable by the employer to a worker for work is stipulated by the Labor Law, Collective Agreements, Employment Contracts and Work Orders. More complex and demanding jobs are more paid than simple jobs. In the period from 2000 to 2015, gross and net salaries were on a steady rise, and in 2016 they were reduced. Increasing productivity does not lead to any increase in salaries. The salary consists of the following elements, which are: basic salary, stimulus part of salary, allowances, allowances and profit share. Every employee doing their job well should be rewarded to be motivated for further work. Employees can be rewarded in various ways, some of them being: bonuses, various bonuses, free days, and the like. Strategic analysis is the first step in the process of defining an externally competitive compensation system. It needs to be carried out in order to diagnose the state of the company's business and its development perspective, which significantly influence the determination of the level of total compensation that an enterprise can offer to its employees. The baseline index expresses the state of the observed period relative to the state of the previous period of the time series.