Compensation Strategies That Work

By Stacey Carroll, 

This week, I presented a new webinar entitled "Compensation Strategies that Work." If folks were hoping that I had a magic answer for the compensation strategy that works best they were disappointed. The point of the webinar was that the strategy that works best for your organization is the one that your senior leadership team thinks fits your organization's particular business objectives.


Getting to a Compensation Strategy

We started off by defining what I think are the three most important ways to define a compensation strategy

1.  Define who the market is.

2.  Know how competitive you want to be.

3.  Choose what to reward.

If your organization (specifically your Exec team) can reach consensus on the right strategy, then you can move onto the next step of crafting a compensation plan. There are many more moving parts after these things are decided. For example, you’ll need to determine incentives, how often to analyze the market, and how you’ll handle career advancement or promotions, but these things should be defined based upon a well-crafted strategy.  

PayScale Client Example

In the webinar, we gave some examples of compensation strategies that worked at various client organizations. They were as diverse as the organizations we work with. You can listen to the full webinar for all the examples, but here is one client example that stands out.

We recently worked with a large organization that was concerned with their across-the-board increase strategy. They also had a complicated internal job evaluation method for determining pay ranges, but it was not helping them stay competitive with external competitors. The first step in the project was to meet with their execs team to work through the three questions above to get to the right pay strategy. 

  • Who was their market: The nature of their organization was that they were competing with other government agencies, private enterprise, and casinos for talent. They would need market data that represented the diversity of their business operations.  
  • How competitive were they going to be: Their overall strategy was to be competitive with the market at the 50th percentile, but there were some areas (especially in healthcare) where this strategy was not going to work for them. So, they created a meet-the-market approach for most positions with an exception for high-demand areas. In those areas, they varied their strategy to target the 75th percentile. 
  • What to reward? Knowing that they had some work to do to get their managers ready to reward performance, they decided to move forward with a raise strategy that rewarded employees based on their position against the market. For example, an employee who was paid at 80% of the market, would receive a larger increase than an employee who was paid at 110% of the market. In time, they will add an additional variable of performance to the equation. 

Since completing this exercise, the organization is well positioned to compete for and retain the talent they need, keep operating costs in line with board expectations and communicate clearly with employees how the compensation plan was designed. The result: a successful outcome to a tricky problem.

This is just one example (of many) highlighting how a well-thought out strategy can help to guide a compensation plan that will meet business objectives. Tell us, do you have a compensation strategy that works well? 



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  2. 5 Tracey 19 Mar
    Hi Stacey, May I have a copy of these slides? It is a great presentation. Thanks Tracey
  3. 4 sujayalakshmi 19 Jan
    Dear Sir, Kindly send me the webinar slides. Regards, SUJAYA
  4. 3 Diana Greene 05 Nov
    Could I get the presentation slides as well. Thank you.
  5. 2 jesus 19 Aug
    Please I would appreciate if you can send me the presentation. Thanks
  6. 1 patti 12 Jul
    can this webinar slides be downloaded


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