Culture

Install an Equitable Pay System

Build a clear, consistent structure for how people are paid—grounded in your values, tied to role levels, and simple enough to apply without reinventing the logic every time.

Updated October 20, 2018·9 min read·~6 weeks

There is a clear, consistent way to decide how people are paid—so pay decisions feel fair, explainable, and not ad hoc.

Why This Project Matters

When it comes to figuring out how much to pay people, the "easy" thing to do is to ask some peers or do a quick Google search.

The problem with this approach is that it only seems easier. In fact, when you do this, you often end up with more headaches down the road:

  • Being stressed out trying to make payroll because you're paying too much for your team, you're not getting the results, and you can't afford it
  • Having to constantly re-make decisions about how much to pay people, whether to give them a raise, how bonuses work, and so on
  • Contributing to the wage gap and pay inequity, because your pay isn't based on any fixed measures

That's why it's so important to create an equitable pay structure for your company. When you do, you'll not only be more profitable — because you know exactly how much to budget for every position you need to fill — but you'll also reduce decision fatigue and consciously create a culture where people are paid really well for the value they bring to the business.

Defining equitable pay requires more than pulling numbers out of a hat. It requires four things working together: a Philosophy (how your company thinks about compensation), Positions (how you define which roles get compensated at higher levels), Benchmarks (the baseline for each type of position), and a Comp Grid (the actual calculations). At each stage, your values should be guiding the decisions you make.

Prerequisites: A completed Billion Dollar Team design (Project 19) and Job Descriptions with Success Measures (Project 15) are required before this project can be completed properly.

Milestones