Pay grade is a compensation range that is assigned to a specific job and seniority. Pay grades are associated with a career ladder (see end of this article). Career ladder is a summary of all jobs by seniority defined by required competencies. Competency = know-how + skills + behaviour A career ladder also refers to…
Equity compensation is the most meaningful form of performance compensation. Early stage tech companies also use company equity to retain and attract talent (that they would not be able to pay fully in cash). Publicly traded companies use performance stocks to align and incentivise employees (mostly executive team) to create shareholder value. Publicly traded companiesThe…
The ultimate compensation driver is profit & loss responsibility. Many people believe they have one, but unless their compensation is primarily based on profits, they do not have that responsibility. Your compensation plan must be simple and scalable. Simple means easy rules that can be quickly explained by any junior employee. Scalable means that core…
Profit sharing among employees can increase ownership, accountability, and performance. If structured and communicated properly, it unlocks performance potential by inducing employees in search for growth or profitability measures. The profit sharing can structured around operating profit, gross margin, or cost savings. Example #1:Company sets a profit target of $0.5 mil. It allocates 1/3 of…