Like it or not, what you pay people is personal. What coworkers get paid and why they get paid what they do is also personal.
And yes, coworkers often talk about what they get paid, so having a rhyme or reason behind why people in different roles and at different stages in their careers make what they do is smart.
Think about it like this: If you inadvertently shared your payroll doc with the whole company, could you stand by it with a sound explanation as to why people get paid what they do compared to each other and to market data?
If the answer is no, you have work to do. At Help Scout, we strive to answer that question with a confident yes.
5 ways to nail your compensation strategy
Compensation is complicated, and it can get messy when you don’t have a good plan in place. And it happens to be something that impacts every person on your team, not to mention those future hires you have your eye on. Here are several approaches we’ve taken, and lessons we’ve learned along the way, that will give you a good start when you dive into creating (or improving) your compensation strategy.
1. Dig for that data
First things first — round up some data! Plenty of resources out there (such as Radford, Payscale, and Glassdoor) offer compensation data, and some of them, like Culpepper, offer a price break for new and emerging companies.
It’s a lot of work (and not always possible) to match roles to the surveys, but it’s worth it to see what percentile you’re paying compared to other companies of a similar size and/or region.
HR groups like OrgOrg or VC groups often share salary data with each other for free if you’re looking for other cost-effective data points.
And don’t discount specialized salary-related resources — every data point can help inform your own compensation strategy! Help Scout, for example, partners with Support Driven each year to publish the annual Customer Support Salary Study and accompanying salary calculator so that managers, employees, and job seekers can have more informed conversations about compensation for customer support work.
2. Form a framework
We love constraints at Help Scout, and our salary formula is one of our self-imposed constraints. It helps hold us accountable to our team with a structure that’s fair and transparent.
A handful of companies take the transparency a level further and share what each specific team member makes — we don’t do that, but our formula numbers are available internally for team members to see. For example, everyone in Marketing can see what an Engineer at level 3C earns.
Help Scout’s salary matrix is made of levels and bands:
|Band A||Band B||Band C||Band D||Band E|
|Level 1||lowest salary|
|Level 5||highest salary|
An awesome but relatively inexperienced customer support person might be hired at Level 1, Band E, and then move to the next level as their skills improve.
Each of the five levels is broadly defined across the company, including competencies we’d like to see at each level, like “skills & experience,” “impact” and “leadership.”
For example, here’s how we define level 2:
Skills & Experience: You have a sincere passion for your craft and have demonstrated success in your experience up to this point. You can sustain day-to-day excellence in your role with little direction from others, working toward complete ownership over your role.
Impact: Your skills and knowledge enable you to own a complex project or area of the business and serve as the “go to” resource on its implementation.
Leadership: Team leads trust you to own specific tasks or projects and carry them out with excellence while improving your skills. You’ve established yourself as an expert others can lean on with regard to certain areas of the product, architecture or business.
Those competencies manifest differently across roles and teams, but all generally map back to these level descriptions. The level descriptions are a tool that both coaches and players can use to help support raises.
It’s hard to remove all subjectivity from the matter of raises, but a structure helps. Plus, transparency helps build trust between the company and the team. It encourages players (individual contributors) to talk with their coaches (managers) about what they need to do to make it to the next level, and it keeps growth in all different areas in mind.
Within each level there are five bands, which we use to help show progress in that level. Maybe someone is making a strong impact on the business in terms of delivering great code but needs to work on leadership skills in order to get to the next level — the bands are how we can help measure that progress.
We don’t conduct annual performance reviews. This progress is measured by milestones that players and coaches map out together and revisit on a regular basis in one-on-ones.
3. Put your money where your mouth is
Each role has a different scale and matrix associated with it that roughly maps back to market rate salaries. This is where you can be opinionated as a company, and this is where I’ve learned that compensation is an art, not a science.
As a company, you can decide which roles to pay above market rate for. You can also decide which roles you’re not going to pay above market rate for.
With a more purposeful and opinionated approach, you’ll more easily find values-aligned, talented people that meet your needs . . . and they’ll be paid properly.
4. Be purposeful with perks
A lot of perks out there are designed to pull people into an office or keep them working longer hours — like free food, games, gyms on site, and so on. We want to do the opposite. Like Patty McCord says in Powerful: Building a Culture of Freedom and Responsibility:
“People’s happiness in their work is not about gourmet salads or sleeping pods or foosball tables. True and abiding happiness in work comes from being deeply engaged in solving a problem with talented people you know are also deeply engaged in solving it, and from knowing that the customer loves the product or service you all have worked so hard to make.”
Help Scout is not a family. It’s a group of values-aligned people who want to do great work together, then go home to their families, friends, side-hustles and hobbies. We want people to work smarter and not harder, so our benefits include things like a “learn something” stipend, professional coaching sessions, home-office furniture, and a co-working stipend.
We’ve chosen to be as generous as possible when it comes to fully covering our employees’ and their families’ basic needs. We offer 100% coverage on monthly healthcare and dental premiums, pay for long-term and short-term disability insurance, and offer a basic life insurance policy. We have a modest 401K match and offer an HSA, FSA, and HRA (all the acronyms)!
We might consider layering on more benefits in the future, like reimbursements for healthy activities, CSAs, or mindfulness programs, which help us all maintain a balanced life — but you won’t see any foosball tables on that list.
Choose wisely, and you’ll attract candidates who value what you value.
5. Expect change
The market is going to shift, and you don’t want to miss out on top talent. You’ll want to keep your finger on the pulse. And your company will change! When I first joined Help Scout, we only had 10 people. Our salary structure had four levels of pay and zero bands, which meant that if you were hired at a level 4, you’d never get a raise. Imagine telling that to a candidate!
Over time, we gathered more data and have been able to shift that formula to help promote growth in all areas and roles while still maintaining consistency. In fact, we’re currently in the middle of another compensation revamp.
When it comes to compensation, keep an open mind and expect it to evolve. And don’t be afraid of soliciting feedback from your team! It’s a sensitive topic, but when you encourage transparency and openness, you’ll be more likely to land on a strategy that feels more than fair to everyone.