Frequently Asked Questions for Managers: Compensation Review
What is our compensation philosophy?
We provide compensation that is externally competitive to the market as well as internally equitable in order to attract, retain, and motivate highly skilled and talented employees. Employee compensation is regularly reviewed to ensure alignment to the company’s strategic goals and business needs.
How were salary decisions made?
Salary decisions were made by designated leaders. During the Compensation Review, each leader proposed salary increases and factored in discussions with the employee’s manager. They also considered data points and factors such as job title/level, market rate, market position (e.g., compa-ratio, which is actual salary divided by market rate to show where the employee stands against the market), and localized compensation market data based on work location. Leaders considered the employee’s performance as well in order to propose salary increases for employees.
What does compa-ratio mean?
Base salary compa-ratio is calculated as the employee’s actual base salary divided by the market rate for a given employee’s job. A compa-ratio of 100% means that the employee is aligned exactly to the midpoint of the range for their job.
A compa-ratio between 85% to 115% means the pay is considered within the competitive range. Generally, employees who are new to their role can be found at the low end of the range and the high performers with special skill sets at the high end of the range.
Compa-ratio, along with employees’ performance were among the factors leaders used in proposing compensation increase recommendations.
Can the compa-ratio be shared with an employee?
No, compa-ratios are provided to leaders as one data point (along with other data points) to consider when making their compensation decisions. The specific compa-ratio percentage should not be shared with the employee; it is for leadership only.
However, managers may choose to share the broader market position category with the employee (i.e., “below market” (if below 85% compa-ratio), “within market competitive range” (between 85% and 115% compa-ratio) and “above market” (above 115% compa-ratio)) if they feel it helps their conversation. For example, “Currently, your salary is considered within the market competitive range when compared to the market for your job.”
What market data are used to determine competitive market-based rates for jobs?
The market compensation data in Kamsa includes global technology companies similar to us.Kamsa's market compensation data is a credible source that consists of actual employee data reported by organizations, and then anonymized, unlike Salary.com and Glassdoor.com, which use unreliable salary data from the public (e.g., crowd sourced).
What if the employee thinks they are below market?
The salary ranges are established (and updated every year) using reputable global compensation market survey data. A job analysis is conducted to ensure the job matches against the survey source are aligned to our company's jobs. Companies similar to our company in the global technology industry participate in the surveys and the market data is updated frequently (i.e., quarterly).
Talk to your leader to discuss the market data and compa-ratio for the employee you may believe is below market. If your leader agrees with the below market assessment, then establish a plan if there is not one already in place, to bring his/her compensation up, if it makes sense (i.e., employee’s performance meets or exceeds expectations and their salary is below 85% compa-ratio). Generally, employees who are new to their role can be found at the low end of the range and the high performers with special skill sets at the high end of the range.
Often, employees in startup or emerging companies will cite comparisons to other large well-established publicly traded companies as evidence that they are not paid fairly. Companies like Google and Facebook are more profitable and are able to pay their employees a higher salary.
Our company is committed to providing fair compensation compared to the market in which we compete for talent. People joining our organization have total rewards that include tangibles like pay and benefits, but also career growth and career opportunities that are not necessarily easily found in very large companies.
Ultimately, working at an organization like ours is a very different experience and payback proposition than working at a larger company. We hope to attract and retain employees for other reasons beyond pay, i.e., for their personal growth and to be part of our journey for sustainable, profitable growth!
What is the effective date of increase and promotions (if applicable)?
Once all proposed pay decisions are fully approved, all Comp Reviewers will be notified that managers can communicate final pay decisions to their employee(s), as well as the effective date of increases.
Please do not communicate any compensation increases or promotions prior to receiving communication that the Comp Review has been completed.