Pre-IPO Company

Our Services

  • Compensation plan design (Base, Bonus, and Equity Guidelines)
  • Job Leveling and Career Pathing
  • Detailed Implementation and Communication Plans

Sometimes plans are a good idea—especially when it comes to compensation

The job market in the Bay Area is red-hot, and it’s an exciting place to be. We talk about talent, unprecedented growth, unicorns, IPOs, and lots of other cool stuff. But what’s not so exciting is talking about job levels, compensation design, pay-for-performance incentives, and market-calibrated salaries.

How do I know this? Because a recent study published by Payscale found that the #2 reason why people leave a company is because of pay. Speaking from my own 15+ years of experience as a compensation consultant in the Bay Area, I have a pretty good idea why it’s the #2 reason: no solid compensation plan.

For a lot of new and growing companies in the Bay Area, no plan = no problem. “Move fast, break stuff,” right? Well, guess what—that kind of plan just won’t cut it for 21st-century HR programs.

But, But, But…

I get it. When I consult with companies on their compensation design, I see firsthand what HR leaders face on a day-to-day basis. You’ve got aggressive hiring targets to meet, talent battles to win, and employees to keep happy. You’re expected to manage all things tactical, operational, and cultural when it comes to your people, and that leaves little time for anything else.

But believe me: a “plan-free” approach to compensation not working.

One reason: The current workplace has shifted from employer-centric to employee-centric. Employees have a lot more power and influence. They’re demanding competitive pay, exciting growth opportunities and challenges, and attractive workplace perks—all in a seamless, transparent, fair, and simple rewards program. They want it all, and they have the upper hand.

If your compensation plan isn’t keeping pace, it’s easy for talent to walk out the door. That’s headache #1. Headache #2: Your unhappy employees stick around, but they’re less engaged. Their unhappiness starts rubbing off on others, and team morale takes a hit. Those employees might even add their two cents in a toxic review on Glassdoor.

The good news is, there’s a better way: Build a Better Compensation Plan. Get jobs benchmarked. Update titles and descriptions. Design competitive salary ranges that are easy to follow while giving managers some flexibility. Ensure that your compensation plan and spend align with strategic priorities.

That’s the kind of plan you need to stay ahead of the game with employee expectations, market realities, fair pay legislation in California and continued growth in the Bay Area.

The good news: working out a solid employee compensation plan is worth the effort, as GoDaddy found out when they overhauled their pay system. Matt Toeller says that before they reworked their compensation plan, “The process was, ‘What did we pay the last person? Let’s pay the new person what the last person was making.” (Sound familiar?) When they started determining pay by experience, skills, location, and talent needs, they wondered, “Why didn’t we do this sooner?”

Being spontaneous is a virtue, but not when it comes to pay. Time to put a solid compensation plan down and watch the future of your company take off.

Ready for some help? Contact me, and let’s make it happen sooner rather than later!

Three Lessons from a Compensation Plan Consultant: What Compensation in the Bay Area Looks Like Today

As a compensation consultant and analyst in one of the most exciting job markets in the world, I have a special window into the crazy that is the Bay Area employment market. I get to see what companies think works when it comes to employee pay…and I get to see what happens when what they think works actually doesn’t. And I see what happens when companies get compensation right (spoiler alert: good things).

So what have I learned after 15+ years as a compensation consultant? Here’s my top three:

  1. Bay Area Employees are on to unfair pay practices. And they don’t waste any time leaving when they figure it out. A recent analysis published by Payscale found that the #2 reason why people leave a company is because of pay. People leave because someplace else is paying better. Now, this is not to say that you can (or should) throw all the money you can at your critical people. But you definitely should be able to tell your employees, “here’s the current market median, here’s where your pay is, and here’s why.”

Transparency around your pay practices should be a #1 priority for any company—and when you can show that to your employees, they’re much more likely to stick around.

Speaking of which…

  1. Inconsistent recruitment practices.Why do so many companies have compensation practices that are all over the board? Because they want to attract hot talent (but don’t give much thought about retaining them down the road). A more aggressive manager may want to bring on a “superstar employee” and pay top dollar to secure the talent. Another manager in the same department may take a more conservative approach to setting pay levels for this same employee.

This compensation analyst has two words for that: BAD IDEA. The more decisions that are made without regard to market data and planning places major strain on the integrity of your company’s job levels, and can also be a major source of inequity issues between employees (ahem: see #1.)

  1. Most companies don’t understand the compensation landscape. Start-ups know they have to battle multiple companies for the best talent, all day, every day. But unless you know what the competition is paying, you could be losing the war. On top of that, you can’t find this information with a simple Google or Glassdoor search. If you really want to know what your competition is paying, you need verified data from published (and often paywalled) survey sources and studies.

While the competition doesn’t necessarily dictate what you pay your employees, having this information can be an important benchmark and guide for keeping pace with the industry. It can be really helpful to manage your day-to-day decisions, as well as give you a global perspective when enacting your compensation strategy.

It’s a lot to handle—but when companies make the decision to have a principled, clear, and market-driven compensation plan, it completely changes the nature of the game. Suddenly, it’s less about putting out fires (talent turnover, shaky employee morale, etc.), and more about the things that most companies can only dream of: stability, forward momentum, and a clear vision of where they’re headed.

The Bay Area is an incredible place to be for a company—but if you’re ready to leave behind the crazy you can do without and enjoy a steadier ride for your organization, a solid compensation plan is an excellent place to start. And when you’re ready to start, I’m here to help—contact me and get the professional perspective your compensation plan deserves.

Our Services

  • Compensation plan design (Base, Bonus, and Equity Guidelines)
  • Job Leveling and Career Pathing
  • Detailed Implementation and Communication Plans

Let’s talk!

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