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featured image thumbnail for post How to Refresh Your Compensation Strategy

How to Refresh Your Compensation Strategy

Planning, creating, and maintaining a compensation strategy requires a mixture of art, science, and a sharp eye for detail.

Companies that lack compensation processes often don’t have the resources to manage the complexity of compensation initiatives effectively. Planning, creating, and maintaining a compensation strategy requires art, science, and a sharp eye for detail. 

Not having a clear compensation strategy impacts your company more than unfair pay and grumbling employees on Glassdoor.com. Establishing salary ranges for all positions in your organization goes hand in hand with successful company growth and revenue generation.

Every company is unique and nuanced in its own right, so there isn’t a “one size fits all” compensation strategy. But, the levers you can maneuver and choose from are common. For example, if you decide to lead the market in salaries, consider removing bonuses (they don’t drive behavior most of the time) and consistently offering refresh equity grants for top talent. It’s essential to create a competitive and effective strategy while customizing it to fit your company’s needs and budget.

The Kamsa team are compensation experts who have helped over 500 companies develop their compensation strategies in the past few years and effectively eliminate key pain points companies face. Clients like MasterClass, Peloton, and InVision have worked with Kamsa to establish career paths for their employees with competitive salary ranges. These have directly impacted employee decisions to stay and grow within the companies. Leaders can make informed pay decisions based on clear compensation philosophy and reliable market data.

Here are four steps to creating a successful compensation strategy:

  1. Re-evaluate jobs by job leveling‍

    • Review and evaluate employee’s roles, scope, and responsibilities in collaboration with each functional leader
    • D‍etermine the business needs for future roles and create career paths for existing and prospective employees
  2. Perform a market compensation analysis

    • ‍Use the latest market survey data appropriate for your industry, and create compensation ranges
    • Market price each job and compare your employees’ salary (and total cash for jobs like sales positions) to the market data‍
  3. Develop a compensation philosophy statement

    • Articulate a comprehensive compensation philosophy in one place
    • Draft a philosophy statement or deck to communicate first with leaders and then with employees
  4. Run Compensation Reviews

    • Create a budget based on each employee’s market positioning and performance rating
    • Determine who are the leaders who will make the compensation decisions

Don’t forget to keep compensation education part of your ongoing dialogue with leaders, so they are aligned with the company’s compensation strategy.

Initiate and share your annual compensation schedule, so they know the timing for compensation reviews and promotions.

This foundational structure is used when developing a compensation strategy for our clients, and we tailor it to fit their specific needs.