Compensation And Benefits Planning

Many FP&A teams forecast compensation using top-down assumptions like "salaries grow 3% year-over-year and benefits are 25% of pay." But this usually fails. Bottoms-up cost builds allow FP&A professionals to build accurate compensation models like this one. Instead of starting with high-level assumptions and averages, it begins with inputs that can then drive the averages used in the financial model. This is an example I sometimes use to illustrate how FP&A teams can build more accurate payroll forecasts: • Separate senior professionals from junior professionals • Build salary growth rates at the category level • Add fringe and statutory costs line by line • Calculate each cost as a % or salaries or per person • Include benefits % of salary to capture non-cash comp The result of this technique is you get a transparent, auditable model with inputs that can be easily flexed. You get immediate sensitivities that you can run on headcount, pay mix, or changes to benefits. And you can easily integrate these assumptions with workforce planning. You can also break down leadership, management, and staff by job category and assign salary bands. If the CFO asks why personnel costs went up 8%, you can show exactly where that increase is coming from. A bottoms-up cost build like this doesn't just make your forecast more detailed. It makes it more defensible for FP&A business partners serving human resources.

Your AE hit quota. Great. But 85% of their pipeline came from inbound or SDR handoffs. Are they a top performer...or just a good order taker? This is the invisible headcount problem: You’re paying for sellers, but only some of them are actually selling. The rest? They’re riding inbound. Responding to hand raisers. Taking what’s given. They're reacting. And if you don’t know which is which, you’re flying blind. Here’s how to diagnose the dependency: 1. Break down pipeline source by rep Segment every deal closed by origin: - AE-sourced - SDR-sourced - Marketing/inbound - Expansion/renewal Then map it to attainment. If reps are 100%+ to quota but 10% of pipeline is AE sourced, you’ve got a dependency problem. 2. Watch for pipeline cliffs Check pipeline coverage vs. attainment. Do reps magically hit quota in H1, then flame out in H2? That’s likely reliance on inherited pipeline. 3. Inspect outbound behavior Ask: When was the last time this rep sourced a net new opp over $50K? Are they on LinkedIn, running sequences, booking meetings? Or just refreshing Salesforce? Once you do that, you can then close the gap: 1. Redesign comp to expose the gap Good comp plans separate signal from noise: - 12–15% commission for AE-sourced - 7–10% for inbound/SDR Also consider: - SPIFFs for self-sourced meetings that move to Stage 2+ - Tiered bonuses: $5K for $500K self-sourced pipeline, $10K for $1M+ If a rep ignores these? That’s not a comp issue. It’s a skill issue. 2. Add a sourcing target Make outbound a requirement...not a nice to have: - 30–50% of pipeline must be AE-sourced to unlock accelerators - Quota flexibility based on mix: self-source 50% = $1.2M quota; <20% = $1.5M quota 3. Build a coaching cadence Outbound is a muscle. Coach it weekly: - Inspect prospecting activity - Review outbound messaging - Run role plays and cold call breakdowns It’s not just about effort. It’s about control. Because if your reps can’t drive pipeline, they can’t drive growth. And no amount of inbound will save you if the faucet runs dry.

For a lot of my career I used to under-budget for the compensation cycle, because no one ever taught me how to do it properly. Let’s fix that👇   In the latest episode of the FNDN Series, I asked Melissa Theiss how she tackles it.   Melissa's framework breaks down the 5 essential compensation buckets every startup should budget for   (and most forget at least two of them):   ✅ 1. Merit-based increases Annual or semi-annual? Doesn’t matter if you're not clear on eligibility. → If you're splitting 50/50 across two cycles, you’re probably doing it wrong.   ✅ 2. Promotions Plan for 10–15% increases (20% for high-growth), but don't ignore your band structure. → Overlapping vs adjacent bands changes how you apply these.   ✅ 3. Market adjustments This is the silent budget killer. → If you’re adjusting bands without allocating separately, you’re draining your merit pool — hurting your high performers most.   ✅ 4. International inflation/currency shifts For global teams, FX movement is a comp issue. → Failing to adjust can create internal pay equity concerns.   ✅ 5. Signing & retention bonuses Set limits. Track usage. → If you lump this into general increases, you’re setting yourself up for headaches later.   🎯 Melissa’s #1 lesson: Build your budget by bucket, then partner tightly with finance to ensure alignment.   Too many People leaders (me included) only realise they under-budgeted when it’s already too late — and the consequences hit retention, morale, and trust.   If you're not already besties with your Head of Finance — now's the time to change that.   Melissa brings commercial clarity to a topic most find murky.   Catch the full conversation here 👇 https://lnkd.in/gYQsc7ZV

You’ve got 4%. Now what? That’s the salary increase budget you're working with for this fiscal year. Not 5%, not 6% just 4%. And you’re being asked to use it to reward performance, retain top talent, stay market competitive, fix pay inequities, and support internal mobility. Sound familiar? Here’s a strategic way to allocate that 4% budget across four essential priorities: 1. Merit & Performance (~60% of the total 4% budget or 2.4%) Performance still matters, but the days of providing the same salary increase to all employees is behind us especially if you have a pay for performance philosophy. Tight budgets demand sharper differentiation. High performers should see meaningful increases. Use a merit matrix that includes the performance rating to ensure the highest performing talent feels the recognition. 2. Market Adjustments & Pay Equity Corrections (~25% of total 4% budget or 1%) Data-driven decisions and analysis are essential here. Use them to identify jobs or employees that are underpaid relative to market or similarly situated peers, especially in high-demand roles or historically underrepresented groups. 3. Promotions & Reclassifications (~10% of the total 4% budget or 0.4%) Use this to fund promotional increases and grade reclassifications. Promotions shouldn’t cannibalize your merit budget. Make sure they’re meaningful pay increases to recognize significant job responsibility changes. 4. Critical Retention Reserve (~5% of the total 4% budget or 0.2%) Set aside an “emergency reserve” for off-cycle adjustments. These are your just-in-time retention tools for flight risks, counter offers, or mission-critical roles where losing talent would be costly. Use sparingly but strategically. Why it matters: Without intention, budgets get used up quickly and by the end of the fiscal year there is nothing left to spend on critical talent. Allocating your 4% with purpose ensures alignment to business goals and talent needs. It also helps you communicate more clearly with leaders about how the overall budget is aligned to the various reasons for pay changes throughout the year. Build in budget reviews quarterly. Your compensation decisions should be agile especially in today’s labor market. How are you allocating your salary increase budgets this year? #Compensation #TotalRewards #PayEquity #HR #HumanResources #MeritPay #Retention #InternalMobility #CompensationPlanning #WorldatWork #SHRM #CompensationConsultant #FairPay

I coach dozens of sellers making over 500K-1M/year, and there’s one thing they have in common which nobody talks about that’s foundational to their success: They have great comp plans! Each of these sellers has a high OTE (On-target Earnings), fair quota, and generous accelerators which allow them to get financially rewarded when they crush their number. So how do you know if you have a great comp plan which allows you to make life-changing money? In today’s video, I share everything you need to know about tech sales comp plans. This training includes critical information to maximize your income, including: - What are good OTE’s for SMB, Mid-Market, Commercial, Enterprise, and Strategic segments? - What is the quota range you should expect based on your segment? - What’s a great commission % in software sales? - What are accelerator bands and how do they work? - How much do you need to sell to make 500K-1M as an Enterprise AE? Here are a few of the top insights from the video: 1. The key to making 500K+ is the unique combination of a high OTE plus a low quota. This gives you an opportunity to blow out your quota and get into accelerators quickly, where the real money is made. 2.  Comp plans with a 5x OTE to quota ratio are highly favorable, 6x is much more common, and 7x is less than ideal. So if your OTE is 300K, a 1.5M quota is great, a 1.8M would be more common, and anything over 2.1M is less than ideal for making big money. Enterprise AE’s at large companies (Oracle, Salesforce, SAP) typically see 7x + ratios, since they have bigger deal sizes in that segment. I’ve seen clients with a 300K OTE and a 900K quota (3x ratio), which has incredible earning potential. I’ve also seen clients with the same 300K OTE and a 3M quota (10x), which becomes more challenging because you must sell 9M ACV to hit 300% of quota. Please note that I’m referring to growth quotas, not renewals. So if you work in a consumption model, just look at your growth number. 3. Most commission plans have accelerators that multiply 1.5x, 2x, and 2.5x when you overachieve. So if your base commission rate is 10%, that means you make 15%, 20%, or 25% of revenue based on the overachievement band that you’re in. 10% base commission is healthy, 15%-20% commission in accelerators is good, and anything over 20% is excellent. 4. The best comp plans have no commission decelerators. For example, anything over 200% will pay at the highest accelerator level. At larger companies, decelerators are more common, typically when you reach 200% of quota. This means that your commission rate goes down, which actually encourages reps to sandbag for next year once they reach the highest commission tier. Decelerators = demotivators. At the end of the training, I share a link to a free income planner to help you calculate how much you need to sell to make 500K-1M based on your own comp plan. Watch the full training here: https://lnkd.in/g_dptprk

I received a lot of questions about how to structure KPIs and compensation plans for CS, sales, marketing, product, engineering, and other teams. In general, I’m a big believer in inputs. I genuinely think that when you do the right things—the right activities, focus, and effort—the outputs fall into place automatically. But businesses don’t run just on inputs. They run on outputs. On revenue. So, KPIs and compensation plans for any team need to be linked to both inputs and outputs. For example, if I were setting up KPIs and comp plans for Customer Success (CS) teams, I’d break it down like this - 25% Inputs - Engagements, Adoption rates, Business review coverage, Desired outcome coverage, Account mapping or relationship coverage, Predictability of risks 75% Outputs - NRR (Net Revenue Retention) and GRR (Gross Revenue Retention) Similarly, for Sales or New Business teams - 25% Inputs - Engagements, Meetings booked (virtual vs. face-to-face), Demos done, Discovery calls, Handovers, Deal velocity 75% Outputs -New booking revenue closed, Churn within the first year For Marketing - 25% Inputs - Touchpoints and assists, MQLs (Marketing Qualified Leads), SQLs (Sales Qualified Leads) 75% Outputs - Pipeline generated, New booking revenue closed These are just examples, but you can apply this framework to any team—marketing, product, or engineering within the company. If you want to take it up a notch, consider adding NRR and GRR factors to the compensation plans for all teams. Because in SaaS, it’s not just about bringing in customers; it’s about bringing in the right ones, retaining them, and growing them. Think about it: Would you prefer a $200k deal in the first year that downgrades in years 2 and 3, or a $100k deal in the first year with upgrades in years 2 and 3? The latter is better. Marketing, Sales, CS, and Product—all of us need to understand this. When you design KPIs and compensation plans the right way, chances are the teams will put in the right effort, and there will be alignment and collaboration between different functions. How do you structure your goals and KPIs? I’d love to hear your thoughts. ------------------ ▶️ Want to see more content like this and also connect with other CS & SaaS enthusiasts? You should join Tidbits. We do short round-ups a few times a week to help you learn what it takes to be a top-notch customer success professional. Join 1845+ community members! 💥 [link in the comments section]

This is the most underrated problem I've seen when trying to build or expand partnership GTM: Leadership is initially fully behind a new partnership, excited about its potential, but that enthusiasm never makes its way down to the sales teams who are expected to execute. Without alignment, even the best partnership can stall before it has a chance to succeed. Why does this happen? Sales teams are often focused on their core products, and if a partnership doesn’t clearly benefit them or fit into their day-to-day operations, it becomes an afterthought. To turn things around, you need to make sure your partnership incentives, compensation, and training are in lockstep with the teams that will be selling your product. Here’s how to align incentives and drive results: 1. Ensure your incentives are compelling enough for frontline teams. It’s not enough to excite leadership—sales teams need a clear, tangible reason to sell your product. - Introduce a financial incentive or bonus structure that’s competitive with what reps earn on their core products. This could be a one-time bonus for the first sale, or an ongoing commission that rewards consistent effort. -Tie the incentive to their existing sales goals. If your product helps them hit their targets more easily, they’ll naturally prioritize it. 2. Structure partner compensation to motivate co-selling. If your partner compensation doesn’t align with their core goals, they won’t push your product. - Design a compensation plan that aligns with both the partner’s and your business objectives. For instance, if your partner’s core offering is hardware, incentivize bundling your software as part of the sale to create a win-win situation. - Offer performance-based incentives that reward partners for hitting key milestones—whether that’s a certain number of units sold, a specific revenue target, or even customer engagement metrics. Keep it simple and measurable. 3. Provide consistent training and engagement so your product isn’t just another checkbox. Sales teams won’t advocate for your product if they don’t fully understand its value or how to sell it. - Develop ongoing, bite-sized training sessions that fit into their schedules. Instead of overwhelming them with lengthy sessions, focus on 15-minute, high-impact trainings that teach them how to identify the right opportunities. -Pair training with real-time support. Join sales calls, offer one-pagers, and provide direct assistance during key customer engagements. When they feel supported, they’re more likely to feel confident pushing your product. This kind of alignment can make the difference between a stalled partnership and a thriving one. When sales teams are motivated, equipped, and incentivized to sell your product, the partnership stops being just another checkbox—it becomes a key driver of growth.

What is the optimal width for your salary ranges? Like many questions in the world of compensation, “it depends”. Today, let’s take a look at some of the market benchmarks related to salary range widths and then zoom out for an analysis of how to make the right decision for your company. And as a disclaimer, we analyzed this same question 6 months ago. But for today, let’s take a fresh look with slightly improved methodology and updated real-time benchmarks from Pave’s April 2025 data release. ________________ First, the breakdown of which salary range widths companies most commonly adopt. Methodology: for this analysis, the formula for determining a company's most common band width is (max-min)/min. E.g. a range of $170k to $200k = $30k/$170k = 17.6% which is rounded to 20%. ✅ [𝗡𝗮𝗿𝗿𝗼𝘄𝗲𝘀𝘁] 20% Salary Range Width => 16% of analyzed companies ✅ 30% Width => 11% of companies ✅ 40% Width => 30% of companies ✅ 50% Width => 30% of companies ✅ [𝗪𝗶𝗱𝗲𝘀𝘁] 60% Width => 10% of companies Summary: A ~40-50% salary range width is most common. ________________ Second, how does a company’s salary range width impact range adherence? ✅ [𝗡𝗮𝗿𝗿𝗼𝘄𝗲𝘀𝘁] 20% Salary Range Width => median of 58% of employees in range ✅ 30% Width => 80% of employees in range ✅ 40% Width => 86% employees in range ✅ 50% Width => 91% employees in range ✅ [𝗪𝗶𝗱𝗲𝘀𝘁] 60% Width => 88% employees in range ________________ So, what is the optimal salary range width for your company? Let’s think about this question under the lens of 4 consideration dimensions: 1️⃣ 𝗣𝗮𝘆 𝗲𝗾𝘂𝗶𝘁𝘆 – wider ranges mean less control over potential pay parity issues, a topic that is becoming increasingly top of mind for companies with European offices in particular. 2️⃣ 𝗣𝗮𝘆 𝗳𝗼𝗿 𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 – wider ranges perhaps unlock more flexibility to reward top performers and give them room to grow within their current range without feeling the need to knee jerk a promotion as the main way to increase their comp once they approach the high end of a range. 3️⃣ 𝗣𝗮𝘆 𝘁𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝗰𝘆 – wider ranges (for salary at least) ultimately will make their way into JDs given the new legislative waves. There are pros and cons to consider from a candidate-facing comms and trust-building perspective as it pertains to wider ranges. Also, on a related note–I would call out that I observe some companies who report min-to-max for their JD ranges whereas other companies do min-to-max. 4️⃣ 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗰𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆 – there are pros and cons either way, but I’d generally suggest that wider ranges give you more wiggle room for special cases. Not to mention more congruence with pay grade style job architectures (e.g. lumping SWEs and AI/ML engineers together in the same job family). On the other hand, narrower ranges give you more control and precision over budget + cost forecasting. There are no right or wrong answers here; just tradeoffs in all directions.

As 2025 comp plans are being finalized make sure these non-negotiables are included. ·     Simple: You shouldn’t need a physics degree from Stanford to figure out how much you’ll be paid at the end of the quarter. ·     Measurable: Reps should be able to calculate their commissions down to the penny at any point during the quarter. There shouldn’t be any surprises when they get their check. ·     Flexible: The plan must accommodate unanticipated events. ·     Profitable: The financial needs of the salespeople and company must be met. Reps should be rewarded, but not at the expense of profit margins. ·     Motivating: There must be meaningful accelerators to reward top performers and decelerators to create pain for missing goals. ·     Thoughtful: Reps will do exactly what the plan tells them to do. Be careful about the goals you set so you’re not surprised by the results. ·     Uncapped: Enough said! A good comp plan will simplify a sales leader’s job by articulating company priorities and goals and rewarding behaviors that support them. A poor plan will result in an unmotivated, internally focused team that could spiral into turnover. You need to get this right if you want any chance for success in 2025. Did I miss anything? I’d love to hear your thoughts.

The Link Between Compensation and Impact on Attrition In today's competitive job market, retaining top talent is a constant challenge for organizations. While many factors contribute to employee satisfaction and retention, one stands out as a crucial driver: proper compensation management. When companies invest time and resources in designing and implementing fair and competitive compensation structures, the benefits are far-reaching, impacting not only the bottom line but also the overall well-being of their workforce. The Impact on Attrition Employee turnover can be costly and disruptive to any organization. High attrition rates can lead to decreased productivity, increased recruitment costs, and a loss of institutional knowledge. Proper compensation management can mitigate these challenges in the following ways: 1. Retention of Top Talent: Competitive compensation packages make it less likely for top performers to seek opportunities elsewhere. They are more inclined to remain loyal to an organization that recognizes and rewards their skills and contributions. 2. Attracting the Best: A reputation for fair and competitive compensation can attract high-calibre candidates, making it easier to recruit top talent in the first place. This not only saves time and resources but also elevates the overall quality of the workforce. 3. Reduced Training Costs: High turnover necessitates continuous training and onboarding, which can be costly and time-consuming. Lower attrition rates mean fewer new hires and reduced training expenses. The Path to Effective Compensation Management To leverage the benefits of proper compensation management, organizations should: Conduct Regular Market Research: Stay informed about industry standards and market trends to ensure that your compensation packages remain competitive. Customize Compensation Plans: Tailor compensation packages to individual roles and employee performance, recognizing that one size does not fit all. Seek Employee Feedback: Encourage open communication with your workforce to understand their needs and preferences regarding compensation. Implement Fair and Transparent Policies: Employees should clearly understand how their compensation is determined, fostering trust and fairness. Regularly Review and Adjust: Compensation should evolve with the changing needs of the organization and the job market. In conclusion, proper compensation management is not merely an HR function; it is a strategic imperative that directly impacts employee happiness and retention rates. Organizations that prioritize fair and competitive compensation will find themselves not only attracting and retaining top talent but also cultivating a culture of loyalty, commitment, and success. In this competitive business landscape, investing in your employees through proper compensation management is an investment in your company's future. #EmployeeHappiness #CompensationManagement #RetentionStrategies #TalentManagement