An article that appeared in Entrepreneur Magazine’s online edition in 2015 made the following observation about compensation:
If you lead a company, that view likely rings true with you. At VisionLink, in our work with CEOs across the country, we hear countless stories about their employees making the case for a certain level of pay based on the data they found on the internet. Others recount instances of people in senior positions feeling they deserve equity in the business based on what competitive data say. Those who pay annual bonuses tell tales of an entitlement attitude that has permeated their workforce. “Employees think their bonus is just an expected part of their pay,” one chief executive lamented. In each of these instances, there is a clear disconnect between company leadership and employees when it comes to decisions about pay.
4. The balance the business wants to maintain between guaranteed and variable compensation. This a further refinement of #3 that defines how the company will address its pay construct in real life terms and on what basis. For example, where does the company want to be relative to market pay for salaries? What about for total compensation? If it believes it should be at the 80th percentile for salaries, what will this mean for how much emphasis will be placed on value sharing opportunities? Will the balance between salary and variable pay differ for each pay grade or tier? (Probably) And why does the company believe this is the right balance to strike?