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Recently, reform and adjustment has been the major rhythm of Chinese Tobacco Industry. The old compensation allocation system could not meet the requirement of the development of tobacco industry. Along with the advancement of marketing procedure, more and more tobacco enterprises have employed the performance-compensation system.Hereby elucidates the position and function and the situation of compensation allocation system in Chinese tobacco enterprises. And takes M company as an example to discuss the principle and basic theory of compensation allocation system, interprets systemically the scientific design theory and method and suggests a compensation design protocol based on the position salary.Firstly we suggested the theoretical base, the respect and general procedure of compensation design based on the marketing mechanism and compensation allocation situation of Chinese tobacco industry. Then we elucidated how to conduct the position evaluation and determine position scale via terms system, how to determine the total wages and position wage coefficient by determining the principle and method of wage standard. And suggest a compensation design protocol of specific population; finally we elucidates the effect on tobacco industry of Chinese entry WTO.