Competitively positioning your compensation

Knowing how much to pay your staff and leaders can be tricky.

You want to incentivise top performance in order to attract and retain top talent. But you don’t want to (or simply can’t) overpay.

What’s the right balance?

And how do benefits and other perks play into your overall compensation plan?

Positioning yourself within the market

To build a general guideline for your payscales, it’s best to look at how you want to position yourself within the market.

In other words, at what percentile of the market do you want to pay?

Do you want to pay at the:

  • 100% percentile — aligned with the top of the market
  • 75% percentile — above two thirds of other companies
  • 50% percentile — the average or median in the market
  • Or somewhere in between?

The percentile you choose will determine your positioning in the market — and how competitive your company is when it comes to recruiting and retaining talent.

Knowing the market

Now you might be asking yourself, how can I find out the market percentiles for my industry?

A variety of methods are available to learn about relevant market rates:

  • Look on websites like for your industry and location
  • Use salary benchmark data from Mercer (or a variety of different apps)
  • Network with other business owners at seminars or conventions (and ask them about their payscales)
  • Call your local chamber of commerce
  • Go to market with offers and get feedback
  • Or simply, give us a call!

Using these tools and connections, you can quickly make a sound estimate on market percentiles.

Making it role-specific

Instead of setting a standard percentile for all positions, you may choose to make it dependent on job role or category.

For example, you may place your administrative roles at the 50% percentile and mission critical tech roles at the 100% percentile.

By making it role-specific, you have flexibility and can ensure your most important roles are receiving the compensation necessary to move your business forward with the top talent.

Factoring in perks and benefits

In addition to salary, consider the benefits, perks and company culture that you offer.

Maybe the fun or flexibility is a big bonus for your employees.

So if you aren’t at the top of the market in solely compensation — at the 75% or 100% percentiles, for example — don’t worry.

Your comp and benefits plan can be strengthened by an attractive benefit package, flexible work schedules or other perks.

In a recent Entrepreneur article, Ray Hennessey shares, “In an era when competition is high for the best and brightest employees, strong pay, generous benefits, open lines of communication from the C-suite on down and a strong mission are what set apart the strongest companies.”

Ensure these elements stand out when you advertise jobs and discuss compensation packages.

Getting it right

Depending on your industry and size of company, your payroll might be one of your biggest expenses.

That’s one reason it’s important to get your salary and benefits structure in a place that fosters high performance and retains high-quality employees.

Stever Robbins recently advises in an Entrepreneur article, “You never want to pay more than the job is worth to you. That’s just good business. Because at the end of the day, a salary is like any business expense–it’s an investment, and you should get a return.”


Any questions?

If you have questions on this topic or any others, feel free to reach me by email or set up a free one-on-one consultation session, or drop me a comment below.

Thanks for sharing!