In the Talent Wars, Compensation Matters. So Does Communication.

Real Life Lessons From VerticalResponse

By Tim Low,

The PayScale Talent Wars event series hit San Francisco last week. Among other speakers, Kate Aughenbaugh, Director of HR at VerticalResponse, a Bay Area marketing and social media platform company, spoke about her experiences working with PayScale to implement a compensation strategy.

One thing she said really stood out for me. She related that you can do all the right things to understand your market, have fresh market data, and understand how you compare with the competition, but it’s not enough.

If you’re not communicating to your employees about compensation, you are ignoring a chance to build a culture of promoting ideas important to your company. You may also be missing an opportunity to show your employees that you know what’s going on in the market. Making them aware of your know-how will prove that you are staying on top of trends that affect pay and that you are taking them into account.

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Over the past few years, employees let HR and the VR executive team know that they thought they were underpaid. The HR team discounted the idea, as they were successfully recruiting strong new hires and they were growing as a business. But still, leadership wondered whether they were paying below the market.

VR decided to end the speculation by looking at actual data. They determined what the market was paying for their job types. They paid particular attention to job-level data for critical roles like Ruby on Rails developers and social media managers. Getting real world data finally put the question to rest. They found that they were not underpaying their employees at all. In fact, they were paying fairly and, in some cases, quite generously.

The executive team and HR now had data, knowledge, confidence and a story to tell the company. They began to broadly communicate that they wanted to pay for talent and to pay for performance. To reinforce the message, they explained that compensation, in part, would be based on market data to ensure that they maintained competitive compensation practices at their company.

VerticalResponse was listed as a best place to work in the Bay Area from 2007 to 2009, but they fell off the list in 2010. The list is ranked based on responses from employee surveys. Having explained that the company’s pay was at or above the market, they decided to reapply for the list. The effort must have made an impact, as VerticalResponse is once again on the list.

The moral of the story is clear. You can study the data all you want. You can build the best compensation plan in the world,  but if you are not communicating to your employees, your work can be for naught.

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