What do you consider when designing compensation structures that attract and retain talent while also ensuring fairness and equity?

First determine what factors are most important to you as an employer. That list may look something like this.

1. Alignment to Organization Strategy and Goals: Influences compensation philosophy and incentive metrics

2. Affordability: Impacts budget for annual salary increases and market/equity adjustments

3. Competitiveness: Percentile of the external market targeted

4. Decisions Are Equitable and Fair: Consistent use of standard pay decision making processes.

5. Transparency: How openly you communicate to employees

Your pay related decision processes should include statements like this.

· Determining the value of the job is based on the external market and what is competitive given the pay practices of other employers balanced with internal equity.

· Determining where to pay the employee in the base salary range assigned to the job is typically based on factors like performance, tenure, work location, education, and/or relevant experience.

The part we don’t spend enough time on is often the change management and stakeholder conversations. This includes showing them where you are today and your vision for the future. Then telling the story about how you are going to close the gap. And, of course, what you need from them, when, and why.

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