Many scaleup CEOs and HR leaders wonder how to deal with pay. What is a fair base salary? How can I benchmark salaries for each role? How do I set up a clear reward structure? Should I introduce a bonus or a commission? And how much should these be? And what about employee participation?
Where to start?
There is no right or wrong and certainly no one-size-fits-all approach when it comes to pay. As bunq's founder and CEO Ali Niknam says "compensation is not an exact science", and many studies have been published on what might or might not work. There are also experiences of companies that are worth sharing. The best advice from Raymond Welmers, Partner and Total Rewards expert at Focus Orange, is to determine the company's vision on compensation first, based on 4 pillars:
- What is the message that you want to convey to current and future employees through your compensation strategy? What do you actually want to pay for? Is it for performance, or for growth and development?
- What are the preferences of the current and future employees regarding rewards and working conditions?
- What are the current costs for your organization? What is the financial impact?
- What is the compensation structure in other, competing organizations?
Based on this vision, you can start developing your reward instruments. As inspiration, we will mention several examples on fixed pay, variable pay, and share options in this chapter.
6 Questions with Dr. Kilian Wawoe: Compensation Strategy
Dr. Kilian Wawoe is a Human Resources specialist with 20 years of experience. After leaving ABN-AMRO Bank in 2010 Mister Wawoe started his own consultancy on Performance Improvement. He leads HR projects in various countries. He also works as a part-time professor in Human Resource Management at VU University Amsterdam (The Netherlands).
Fixed pay is incredibly versatile. Do you want to pay on added value, create fixed steps with a modern twist, or let employees decide their own salary? Here we will explain the different approaches so you can decide what works for your company. • Learn more
Always wondered how to best go about building a variable pay structure? Read tips on what path you should take from companies such as 3D Hubs, Guidion, Castor EDC and others! • Learn more
We talked to experts and entrepreneurs who know how to create a roadmap for your employee participation strategy. Read interviews and watch tips on where to start this journey.
Read, Listen, Watch
Inspired by all you read in this chapter? Check out our tips on how to develop your compensation strategy even further with read, listen and watch tips. • Learn more