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Compensation & Review Process
This section at a glance
The compensation strategy can make or break a high-performance organization; you should strive to pay above market average to get and retain above-average talent
Gathering and maintaining compensation benchmarks across roles, seniorities and geographies is important to ensure you're paying the right price for talent
A standardised pay review process with clear rules around how salaries are adjusted will set the right expectations and save management time
Paying the right price for talent
We believe that to get above-average talent you need to pay above average price. Compensation is benchmarked above the median for key roles, to ensure a competitive offering.
To identify the correct levels, a benchmarking process should be in place. The performance team is responsible for maintaining benchmarks. Some key guidelines:
Maintain data on every role - for each position, there is a matrix covering location, seniority and bonus vs base salary
Use multiple sources and aggregate them into a single framework that fits your organisation - many companies conduct compensation surveys, so pick the ones that best cover your roles and location; some examples can include (some examples include AON Radford, Korn Ferry, Mercer, Ravio, Figures and others)
Review benchmarks periodically - all benchmarks should be updated once a year but one-off requests may also come in from recruiters when they are hiring for a new role or location
Pay review process
Pay reviews can be a source of distraction for management when ad-hoc requests come in and managers need to decide how to reward and by how much. A general, periodic pay review can help address that, while setting clear expectations for employees.
The pay review policy should vary by the status of the employee:
For promoted employees, pay increases automatically to match the new seniority
For A-players who did not receive a promotion in that year, a salary review is completed with the pay adjusted to match the benchmark if it is found to be below it
For everyone else, a general review is done annually to adjust for market conditions
The bar is very high to increase salaries through this process, and it requires showing significant deviation from the benchmark for entire role categories
General inflation is normally not a sufficient justification