People Partnerships

Supporting Employees while Maintaining Business Health

Don’t get me wrong, compensation matters. Especially in today’s economy, where the cost of basic necessities often outpaces income growth, paying employees fairly is essential. But salary shouldn’t be the entire conversation – especially for small businesses and start-ups, where the business’ financial health is imperative.

Pay transparency is helping give both companies and employees gain insight into market compensation; however, there is nuance to what a company is able to pay.

If a company over-extends its budget to pay someone what a competitor may be paying, it could risk the health of the entire company for the sake of one person.

Further, paying people based solely on their “worth” (note: people shouldn’t be assigned a worth, but a job and the skills to do that job effectively should be) can lead to complicated, misaligned, and inequitable compensation across your team.

What You Need: A Compensation Framework

Before you start negotiating salaries or benefits, make sure you have a clear compensation philosophy and basic structure. You don’t need anything fancy – just a framework that answers:

• What is this job worth to the business?
• What skills and experience are required to do it well?

Beyond base salary, consider other benefits or incentives you can offer:

• Flexible benefits such as health, wellness, professional development, etc.
• Bonus or equity structures
• Additional paid time off or training opportunities

HR note: make sure these are documented, and I suggest aligning these to your positions so there’s flexibility, but you’re not creating a whole new workload in tracking and maintaining these!

What You Can Do

Let’s revisit the original point: sometimes you can’t offer more money or a new title, so what can you offer instead?

• Benchmark & Stay Competitive: ensure your compensation is reasonable and aligned – based on your industry, geographical location, and size, as well as the skills and experience required for the job.
• Offer Alternative Benefits: look to the above non-monetary incentives that you may be able to negotiate with in order to supplement base compensation.
• Provide Stretch Assignments: for growth-minded employees, you may be able to provide them with cross-functional or stretch assignments that offer new challenges and further develop their skills while keeping them engaged – without changing job titles. These could also be time or project bound – which could create a short-term increase in title and compensation.
• Invest in Coaching & Training: through coaching, inviting them into conversations/meetings their role may not be privy to, and providing additional training opportunities, you may be able to keep them engaged until you’re able to provide that compensation or title increase.
• Tie Compensation to Future Events: I hesitate to suggest this; however, sometimes you can align a compensation change with a specific business milestone. This could be something like a new store opening or a certain number of signed clients. If you do choose this route:
  • Avoid vague promises
  • Be transparent
  • Ensure it’s written into a contract
  • Include a clear timeline and deliverables
• Support a Graceful Exit: It’s a tough truth, but sometimes the best thing for both parties is a mutual parting – this can build trust, preserve the relationship, and protect your company culture and perception. If someone’s growth goals don’t align with your business’ current capabilities:
  • Be honest about your constraints and needs
  • Encourage open dialogue about their next step
  • Offer support during their job search, and express openness to rehiring in the future should needs and skills align at that time

Compensation is based on a number of factors, and it should be fair and reasonable; however, it’s not always possible to meet every employee’s expectations. When that happens, lean on creative, strategic alternatives to maintain internal equity and financial stability.

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Make sure you’ve gained access to the Hiring Playbook as there’s a spreadsheet in there to help you establish your compensation plan.

The People Playbook is releasing soon with even more details on compensation, as well as how to onboard, manage, engage, and exit your employees – get on the waitlist here!