The right compensation strategy is important to attract and retain talent and to some extent, shapes the culture of the company. These are some key considerations:
Internal equity relates to how employees are paid in relation to their colleagues in the same organisation. This is typically managed through job grades and salary ranges. Possible ways to ensure internal equity of salary includes the use of salary caps and tracking of salary ratios for different seniority levels or roles.
External competitiveness relates to the employee’s salary in comparison to the market salary. Depending on the company’s strategy, you may prefer to pay top dollars to attract the best talent, or pay market median to ensure reasonable competitiveness. Possible ways to evaluate the external competitiveness of salary include salary surveys and benchmarking, or simply collecting a sample of candidates’ salaries during the recruitment process.
Commission or Incentive Structure
More specific to sales or business development role, the consideration of commission or incentive – how much and what structure – is important. It has a direct influence on how your sales team work, and the ensuing culture in the ‘compete’ versus ‘collaborate’ continuum.