Compensation Advice Process
Stewards: Luz Iglesias & Courtney Gakman
Welcome to Ian Martin Group’s Compensation Advice Process, our own Teal compensation practice, developed and tested by your own co-workers.
It is the default in North America to do a Compensation Advice Process (CAP) every three years. Annual salary reviews are the default in India.
A default is a norm, the usual thing. It’s not a requirement. If a co-worker has a reason to do a CAP before the three year mark, or to skip a CAP at the three year mark, that is fine. But if you’re at three years since a salary review, hopefully this will make it easier for you to get started.
Reinventing Organizations notes three compensation patterns that are common in Teal organizations:
- peer-based processes and self-set salaries
- no incentives, but company-wide bonuses
- reduced compensation inequality
We think those practices seek to manage a set of polarities:
- Peer-based processes and self-set salaries allow us to manage a polarity between objectivity (the facts) and subjectivity (individual perspectives and interpretations); good comp advice processes consider the facts and multiple perspectives; they don’t “make a case” or engage in negotiation – there is no need for that because the decision maker is you.
- No incentives, but company-wide bonuses manages individual and collective needs by combining variable individual salaries with collective incentives; it also considers simplicity (simple salaries, no crazy formulas to distract people from doing their best for the company) and complexity (mechanisms that protect the whole in bad times) – ask about the Protect the Downside plan to hear more about this.
- Reduced compensation inequality considers the human value and the needs of every individual with the market-value and company contribution made by each; pay transparency and reporting key compensation metrics may in future help us manage this polarity.
Additionally, it’s our experience that there’s a polarity between demonstrated contribution and potential contribution, where in our comp advice processes, we have seen and exercised a bias for demonstrated contribution, i.e. comp increases not on increase of role(s) but on increase of contribution.
Here’s our hope: manage these polarities well so that you feel fairly & happily compensated; “take money off the table” and instead focus on doing your best and most meaningful work, for yourself and the organization.
Compensation Advice Process Steps
Select a peer mentor from this list: Courtney Gakman, Gillian Levi, Luz Iglesias, and Tiffany Bell.
Prepare your self-assessment and ask your peer mentor to review it.
A note for advisors: you are also welcome to call the peer mentors if you need some help giving advice.
Phase I – Self-Assessment
How are you compensated today?
How did you come to be compensated that way?
How do you feel about your compensation?
To the extent you can, describe and quantify your contribution(s) to the company (effort & achievement). Why do you think you deserve an increase?
Reflect on areas for personal growth/development and areas in which you did not have the contribution you could have had. Can you see any arguments against taking an increase?
What evidence do you have/can you find about your market value (your expected earnings in the labour market) or replacement value (the likely cost to the business to replace you with another person). You can consider sources such as external and internal comparators, salary surveys, competing offers, former positions, etc.
Market Value. What are you and your skills worth on the job market? If you were to leave the company, what job/salary could you get? Have you received offers for similar jobs? The internet is your friend here. Check salaries.com, LinkedIn, indeed, etc. Gather any evidence and data you can and put it HERE:
Replacement Value. Time to put your manager cap on. If you were to leave the company, how would the company replace you? What sort of resource would you have to hire (or shift internally) and what would be their salary? Provide data, evidence, explanations, etc. HERE:
Internal Value. Who are your best internal comparators? Who does a similar job to you, has similar skills to you, or provides similar value as you do? Ask your peer mentor or relevant advisor to collect salary information related to those comparators (ex. ranges, averages, but not names)):
Based on your self-assessment, what compensation are you considering? What is the % increase?
Phase II – Gathering Advice
Create an “invite-only” thread in Loomio, with your self-assessment, and invite your advisors.
Get advice from approx. 3-5 people who:
- Are close to your work
- Have subject matter expertise (in your field, your team or company budget, compensation, etc.)
- Include your peer mentor in the Loomio
Ask advisors for their feedback and/or advice, specifically about how to set your compensation. This can be done in a 1:1 conversation (recommended) or directly in Loomio. All advice should be summarized in the Loomio thread by the advisor.
It is recommended that advisors share their own compensation with you, in order to create a level playing field between you and your advisors and to test the waters of greater pay transparency at the company. Advisors who are not comfortable with this are welcome to decline the invitation to participate.
Phase III – Making & Recording Your Decision
After the Loomio discussion is complete, review the advice you gathered and decide, all things considered, how do you think you should be compensated in the next year?
This practice employs a single decision-maker, which is you; it is not a consent process. So at this point, record your decision in Loomio (as a comment not a proposal). When you record your decision, explain the advice/polarities you weighed most heavily in making your decision.
Then ask the person you “report to” in BambooHR to enter the change in your profile.