Employee Benefits and Rewards

How large should an executive’s target bonus be as a percentage of their salary? From 20% for VPs of HR to 100% for VPs of Sales Getting these ratios wrong can hurt retention or misalign incentives of your top execs. ______________ 𝗧𝗵𝗲 𝗿𝗲𝘀𝘂𝗹𝘁𝘀 𝗯𝗮𝘀𝗲𝗱 𝗼𝗻 𝗮𝗻 𝗮𝗻𝗮𝗹𝘆𝘀𝗶𝘀 𝗼𝗳 𝟮,𝟳𝟬𝟬+ 𝗲𝘅𝗲𝗰𝘀: Our data science team took a look at both the medians and the modes (most common) by executive role. And as a key caveat, this analysis only looks at executives with a defined target variable/bonus plan in place; it’s worth noting that many execs in tech are on a 100% salary cash compensation plan.   • VP of Sales: 100% (median), 100% (mode)   • SVP of Sales: 100% (median), 100% (mode)   • Chief Revenue Officer: 85% (median), 100% (mode)   • Chief Executive Officer: 50% (median), 100% (mode)   • Chief Financial Officer: 40% (median), 30% (mode)   • Chief People Officer: 40% (median), 50% (mode)   • Chief Product Officer: 40% (median), 50% (mode)   • Chief Technology Officer: 35% (median), 15% (mode)   • VP of Business Development: 35% (median), 25% (mode)   • VP of Customer Success: 30% (median), 20% (mode)   • VP of Engineering: 30% (median), 30% (mode)   • VP of Finance: 30% (median), 30% (mode)   • Chief Marketing Officer: 30% (median), 50% (mode)   • VP of Product: 30% (median), 30% (mode)   • VP of Marketing: 25% (median), 30% (mode)   • VP of HR: 25% (median), 20% (mode) ______________ 𝗧𝗮𝗸𝗲𝗮𝘄𝗮𝘆𝘀: 1️⃣ 𝗦𝗮𝗹𝗲𝘀 𝗮𝗻𝗱 𝗿𝗲𝘃𝗲𝗻𝘂𝗲 𝗹𝗲𝗮𝗱𝗲𝗿𝘀 𝘁𝘆𝗽𝗶𝗰𝗮𝗹𝗹𝘆 𝗵𝗮𝘃𝗲 𝗮 𝟱𝟬/𝟱𝟬 𝘀𝗽𝗹𝗶𝘁. This is the most “aggressive” TTC allocation of any exec role. 2️⃣ 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴𝗹𝘆, 𝗖𝗵𝗶𝗲𝗳 𝗧𝗲𝗰𝗵𝗻𝗼𝗹𝗼𝗴𝘆 𝗢𝗳𝗳𝗶𝗰𝗲𝗿𝘀 𝘁𝗲𝗻𝗱 𝘁𝗼 𝗵𝗮𝘃𝗲 𝗹𝗼𝘄𝗲𝗿 𝗯𝗼𝗻𝘂𝘀 𝗽𝗲𝗿𝗰𝗲𝗻𝘁𝗮𝗴𝗲𝘀 𝘁𝗵𝗮𝗻 𝗖𝗵𝗶𝗲𝗳 𝗣𝗿𝗼𝗱𝘂𝗰𝘁 𝗢𝗳𝗳𝗶𝗰𝗲𝗿𝘀. This likely reflects that the two roles have different risk-profiles and downstream incentive practices. Often, CPOs are expected to make large bets that can make or break company quarters whereas CTOs leaders tend to focus more on execution, quality, and long-term technical foundation. 3️⃣ 𝗧𝗵𝗲 𝗺𝗮𝗷𝗼𝗿𝗶𝘁𝘆 𝗼𝗳 𝗼𝘁𝗵𝗲𝗿 𝗲𝘅𝗲𝗰 𝗿𝗼𝗹𝗲𝘀 𝘁𝗲𝗻𝗱 𝘁𝗼 𝗵𝗮𝘃𝗲 𝗯𝗼𝗻𝘂𝘀𝗲𝘀 𝗶𝗻 𝘁𝗵𝗲 ~𝟮𝟬-𝟯𝟬% 𝗿𝗮𝗻𝗴𝗲. 4️⃣ One last key note from our data science team: today’s post lumps all company stages together into one sample set, but it generally *is* the case that variable pay as % of base gets higher as a company gets larger. We can look more at this dynamic in a future post. ______________ 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗮𝗹 𝗦𝘂𝗴𝗴𝗲𝘀𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗖𝗼𝗺𝗽𝗲𝗻𝘀𝗮𝘁𝗶𝗼𝗻 & 𝗛𝗥 𝗟𝗲𝗮𝗱𝗲𝗿𝘀: Exec comp is both an art and a science. Use today’s post as a bit of scientific backing for your decisions as you craft the optimal executive incentive plans. What role-specific factors should influence your variable pay decisions?

In 2015, a Houston energy company wrote a $100,000 check to every single one of its employees.¹ Roughly 1,381 people, including engineers, field crews, and customer support reps.¹ The company was Hilcorp. Five years earlier, it had made the entire workforce one promise. If we double our production, reserves, and the company's value by 2015, everyone wins.¹ Then they hit it, and everyone got paid. Some of those employees earned around $50,000 a year, which is roughly two years' pay in a single bonus. Hilcorp now runs these "Dream" plans on a cycle. In 2021, after another milestone, employees received $75,000 each, plus another $25,000 to donate to the charity of their choice.¹ Management designed the incentive system with a few criteria in mind. - There would be one multi-year, central goal - Everyone could understand it - If the goal was achieved, everyone shared in it equally Every decision got made with the goal in mind. When a field worker knows that doubling the company's value puts $100,000 in their pocket, and their coworker's pocket, and their manager's pocket, they start behaving like an owner. Most companies pour years of work into executive equity plans, but don't give the rest of the company a stake in the outcome. Hilcorp has grown into one of the largest privately owned oil and natural gas producers in the United States by giving everyone a stake in the same goal.

When Rajiv was offered a CEO role at a mid-sized tech company, the headline number looked impressive — nearly 40% higher than his current pay. But when he unpacked it, he realized: The fixed pay was modest. A big chunk came as ESOPs vesting over 4 years. The bonus was tied to aggressive targets that depended on a market expansion not yet tested. On paper, it was a dream. In reality, it was the board’s way of testing his skin in the game. This is the politics of executive compensation. It’s not just salary — it’s strategy. Companies use pay structures to align incentives, retain leaders, or quietly signal risk. Don’t just look at the CTC headline. Break it down. Ask: Is this pay designed to retain me, motivate me, or test me? Negotiate not just for today’s number, but for tomorrow’s value.

If you’re interested in sharing the wealth with your employees, you're going to need an effective profit sharing plan. A good PSP should be easy to understand, versatile, and reward people for over-delivery. Resist the urge to overcomplicate it. The harder your plan is to remember, the less effective it will be. Here are the basics. 1. Pick the goal you want to chase “Show me the incentives and I’ll show you the outcomes.” That perfectly describes profit sharing plans. If you’ve aligned your business goals and your profit sharing plan, you’ll get results. But if you’re incentivizing the wrong thing — say, incentivizing profits when you’re chasing growth — then it will come back to bite you. Example PSP objectives could be: • Employee retention • Boosting productivity • Attracting new talent 2. Choose your model While you can set up a PSP with incentives like stock, options, or retirement contributions, I recommend small businesses stick to cash. It’s a lot simpler. The most common PSP structures are: • Distributing a % of profits (e.g. 15% per quarter) • Distributing a predetermined bonus pool (e.g. $50,000 per quarter) • Distributing a % of revenue (useful for businesses in high-rev, low-margin sectors) Then, decide how you’ll distribute it: • Flat distribution — the amount is divided equally among all employees • Weighted by salary • Weighted by tenure • Weighted by level • Any combination of the above 3. Define the rules Specify clear criteria that determines which employees are eligible to participate. Consider factors like job role, tenure, and full-time/part-time status. In general, senior-level employees are more motivated by (and value) PSPs than entry-level or part-time employees. 4. Inform / educate eligible employees Make sure everybody understands the program, how it works, and why you’re implementing it. Give them a chance to ask questions and clarify. 5. Evaluate and adjust Keep an eye out for employee feedback. Act on constructive suggestions to improve the plan. If few people are on track to earn the PSP, find out why. A final word of advice Anytime you’re doing anything with pay, talk to your lawyer and your accountant. Each type of PSP has its legal and tax implications, so make sure you’re up to speed ahead of time. — What are your thoughts on profit sharing? Follow Michael Girdley for more business content ✅

NEW: How to build a scalable sales compensation operating system. This is a WILDLY important part of your go-to-market. Get it wrong and your best reps walk, your capacity craters, and you pay to rehire the pipeline you already lost... Brian Le (Global Sales Compensation Partner at Notion) joins GTMnow to break down how how to build a great comp plan, including everything from structuring pay mix to identifying the earliest signs of comp plan degradation, and the three inputs every comp plan lives or dies on. He's built comp for multiple well known companies. At Notion he scaled the commissioned org from roughly 80 sellers to over 400. Key takeaways: 1️⃣ Sales comp is the operating system for go-to-market. Most teams treat comp as a derivative of HR: the last thing built, the first thing blamed. Brian flips it. Comp is the lever that translates company strategy into rep behavior. Show me the incentive and I'll show you the outcome isn't a quote to nod at, it's the job. 2️⃣ Trust is the currency of comp. Before redesigning anything at Notion, Brian's P0 was to stop the bleeding and earn the org's trust. Comp had been run by hand in spreadsheets across stitched-together data sources. He ran a full RFP, automated commissions on Everstage, and gave reps real visibility before touching plan design. Earn the trust first, then you have a platform to move mountains. 3️⃣ Every comp plan lives on three inputs. OTE and pay mix, quotas and pay curves, and governance. Pay mix isn't just a split that adds to 100, it signals to reps what they actually have influence over. Quotas need both top-down and bottoms-up, backtested against real conversion rates, not reverse-engineered from a target. Governance is the policies, terms, and crediting rules. When one pillar stops talking to the others, the plan degrades. 4️⃣ Read the degradation before it hits payout. The earliest warning sign is attainment pacing: if deals bunch at the end of the quarter, the cycle is telling you something. Next is attainment distribution. If everyone is blowing out quota, the quota is wrong, not the reps. Diagnose the root cause by segment and region before you swing a blanket quota hike. 5️⃣ A broken comp plan is a capacity problem, not a payroll line. When a rep quits over comp, you don't just lose the seat. You lose every dollar invested in ramping them, then eat the ramp cost again on the backfill. Brian's fix is boring and powerful: minimize surprises. Tell reps exactly how they get paid, then follow through. 6️⃣ Comp your first reps with your eyes open. Two schools for the early-stage founder. Put the first AE on a 100% guarantee to make them whole while you gather data on what's actually closeable, or set a best-estimate quota with downside and upside protection, a payout cap plus a cash-flow floor. Either way, respect the precedent: once you set a threshold, it's hard to walk back. -- 💡 GTMnow shares how the best in tech build, scale and invest.

Accenture just ended its 2.5-year wage freeze. But the real story isn’t the salary increase. It’s the new philosophy behind it. After years of holding back broad-based pay increases, Accenture has introduced a new compensation approach where approved salary increases are split: ✅ 50% added to base pay ✅ 50% paid as a one-time lump sum Accenture’s decision signals more than a change in pay practices, it reflects a fundamental shift in how organizations reward talent. The traditional model of broadly distributed annual increases is giving way to a more targeted approach, where pay growth is increasingly linked to critical skills, market demand, and business impact. The message is becoming clear: in the future of work, skills may matter as much as performance when it comes to rewards. BUT, How employees perceive employer’s pay decisions are driven less by the amount they receive and more by whether they perceive the process as fair. A landmark meta-analysis by compensation researchers Jason Colquitt and colleagues found that perceptions of organizational justice are strongly linked to job satisfaction, commitment, trust, performance, and turnover intentions. In simple words, employees don’t just evaluate what they got. They evaluate how the decision was made. This is where differentiated pay becomes tricky. Mercer found employees who believe they are paid fairly are significantly more engaged and committed. But fairness isn’t just about the amount; it’s about transparency and consistency. The risk is especially relevant in knowledge-intensive firms like consulting and technology. In practice, employees rarely compare their pay to the market, they compare it to their peers. If Employee A receives a 10% increase and Employee B receives 3%, perceptions of fairness are shaped by that comparison. As Equity Theory suggests, employees assess fairness through social comparison. The retention implications are significant. Gallup’s workplace research repeatedly finds that employees who feel recognized and valued are substantially less likely to be actively seeking another job. However, recognition loses its impact when reward systems are perceived as opaque or inconsistent. Which brings us to the most important point. As organizations move toward increasingly personalized rewards, manager capability becomes the differentiator. Employees may not agree with every pay decision. But they are far more likely to accept it when they understand: ✓ What criteria were used ✓ What high performance looks like ✓ Which skills are most valued ✓ What they need to do to progress The future of compensation is unlikely to be about giving everyone the same increase. It’s increasingly about giving different increases to different people. The question for leaders is: Can your organization explain those differences well enough to maintain trust? Because ending a wage freeze may improve morale. But trust is what ultimately drives engagement and retention.

𝗟𝗲𝗮𝘃𝗲 𝗲𝗻𝗰𝗮𝘀𝗵𝗺𝗲𝗻𝘁 𝟮.𝟬 “Most Indian employees are sitting on a hidden asset worth up to ₹25,00,000—and many HR teams are still treating it like loose change. The new Labour Codes plus the revised leave encashment tax rules have quietly turned ‘unused leave’ into one of the biggest, legally blessed payouts in an employee’s career.” ➤𝐖𝐡𝐚𝐭 𝐞𝐱𝐚𝐜𝐭𝐥𝐲 𝐡𝐚𝐬 𝐜𝐡𝐚𝐧𝐠𝐞𝐝? ❶. Unified wage definition = bigger base With the new Codes, one wage definition applies across key benefits, which: - Limits exclusions (HRA, special allowance, etc.) to 50% of total remuneration—anything beyond gets pulled back into “wages.” - Directly increases the daily wage rate used for leave encashment, gratuity, overtime and other payouts. For employees, this is an invisible but powerful upgrade: the same 30–60 days of earned leave can now translate into a materially higher encashment figure at exit. ❷. Wider coverage and a more inclusive “worker” The Labour Codes expand coverage by using broader categories such as “worker,” “employee,” “gig worker,” and “platform worker,” backed by a unified legal framework. This means that entitlement to leave with wages and leave encashment is no longer can extend to a far wider slice of the workforce, including fixed‑term employees. Fixed‑term employees, for instance, now enjoy parity in wages and benefits with permanent workers, including leave and related encashment, along with gratuity after one year of service. ❸. Leave accumulation and on‑demand encashment The Occupational Safety, Health and Working Conditions Code reduces the qualifying period for annual leave with wages from 240 to 180 days of work in a year, improving eligibility for many workers. It also introduces the right to seek leave encashment at the end of each calendar year where unutilised leave has accrued, and to encash any leave accumulated over a prescribed threshold (for example, beyond 30 days) annually. ❹. Two‑day full & final: no more open‑ended waits One of the most employee‑friendly aspects of the new regime is the expectation that full and final settlement, including leave encashment, must be completed within two working days of exit. This applies not just to terminations but to all forms of separation, including resignation and retirement, dramatically improving predictability of cash flows for employees and accountability for employers. ❺. The tax upside: On the tax side, For non‑government salaried employees, the exemption limit for leave encashment at the time of retirement or resignation has been hiked from ₹3,00,000 to ₹25,00,000. This applies prospectively from 1 April 2023 and is available under both the old and new income‑tax regimes. The uniform wage definition increases the base for all wage‑linked benefits, which could significantly raise leave encashment and gratuity obligations unless salary structures are recalibrated.

Meta is making a pretty meaningful shift in how performance actually translates to pay. The company is now paying up to 300% of base bonus to a small group of top performers. Starting mid-year 2026, Meta is rolling out a new review system (“Checkpoint”) that compresses ratings into four buckets and dramatically increases bonus upside for top performers. The headline number: a small group of employees can now earn up to 300% of their base bonus for truly exceptional impact. Breakdown of the new distribution: - ~70% of employees are expected to land in “Excellent,” which Meta now frames as the baseline for a high-performance culture - ~20% will be rated “Outstanding,” with 200% bonus multipliers - ~10% fall into the bottom two buckets, with sharply reduced or zero bonus A few things stand out here. First, this isn’t just about simplifying reviews. It’s a deliberate re-pricing of impact. Meta is explicitly saying that “good” is no longer differentiated. Real upside is reserved for outsized contribution, and the gap between top and average performers is widening. Second, this pairs closely with changes we’ve already been seeing in compensation more broadly: larger bonus leverage, more performance-weighted equity grants and refreshers, and less reliance on flat, time-based rewards. Equity refreshers will now be based on the average of two performance cycles, further reinforcing sustained output over one-off wins. Finally, this move fits into a broader industry trend. Google, Amazon, and others are all tightening performance management while increasing rewards at the very top. In an environment where AI leverage is high and headcount growth is constrained, companies are optimizing for fewer people with disproportionate impact. Net takeaway: titles and levels still matter, but performance differentiation is becoming more explicit, more quantified, and more aggressively monetized, and especially so at companies operating at the frontier of AI and platform scale. The performance era is here, and it seems it’s here to stay. Read more on the news here: https://lnkd.in/g_tz-nh9

There's a secret to what makes pay programs thrive. I've seen it again and again at Google, Cruise, Instacart, and now as CEO of Pequity. The secret? Your pay programs don’t need to be complex. The best programs are clear, consistent, and grounded in data—building trust and fueling scalable growth. They can easily be articulated. The best pay programs can be spotted in one critical piece: pay ranges. They’re the foundation of any comp program that lasts. Here’s how to build ranges that scale, drawn from battle-tested best practices: 1. 𝗦𝘁𝗮𝗿𝘁 𝘄𝗶𝘁𝗵 𝘀𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝗶𝘇𝗲𝗱 𝗹𝗲𝘃𝗲𝗹𝘀, 𝗱𝗼𝗻'𝘁 𝗿𝗲𝗶𝗻𝘃𝗲𝗻𝘁 𝘁𝗵𝗲 𝘄𝗵𝗲𝗲𝗹. Across major surveys (Mercer, Radford, etc.), 9 core levels emerge. Levels range from Entry (L1: HR Coordinator) to Executive (L9: CXO). Tie IC and manager tracks: L3 Career/Lead, L5 Expert/Sr Manager, L7 Architect/Sr Director. This creates a leveling system that grows with you. You can add more levels later, but this will give you the closest reflection of the market to start with. 2. 𝗚𝗿𝗼𝘂𝗽 𝗶𝗻𝘁𝗼 𝗷𝗼𝗯 𝗳𝗮𝗺𝗶𝗹𝘆 𝗰𝗹𝘂𝘀𝘁𝗲𝗿𝘀 𝗳𝗼𝗿 𝗲𝗳𝗳𝗶𝗰𝗶𝗲𝗻𝗰𝘆. Examples of job families are Tech Premium (SW Eng, Data Science), Business (Recruiting, IT), and Sales. Benchmark broadly unless precision adds real value—e.g., don't split Full-Stack from Back-End if the delta's just $5K in a 100K–$140K range. It keeps maintenance sane and prevents overcomplication. 3. 𝗦𝗲𝘁 𝗺𝗶𝗱𝗽𝗼𝗶𝗻𝘁𝘀 𝗮𝘁 𝗽𝗲𝗿𝗰𝗲𝗻𝘁𝗶𝗹𝗲𝘀 𝘁𝗵𝗮𝘁 𝗺𝗮𝘁𝗰𝗵 𝘆𝗼𝘂𝗿 𝗲𝗱𝗴𝗲. Most tech companies aim for tech roles at P75 for base/equity/total comp and Business/Support/Sales P50. Tweak from here for what fits your strategy. This positions you competitively -- blend data from your stage and the next to stay ahead. 4. 𝗕𝘂𝗶𝗹𝗱 𝘄𝗶𝗱𝗲, 𝗼𝘃𝗲𝗿𝗹𝗮𝗽𝗽𝗶𝗻𝗴 𝗿𝗮𝗻𝗴𝗲𝘀 𝗳𝗼𝗿 𝗳𝗹𝗲𝘅𝗶𝗯𝗶𝗹𝗶𝘁𝘆. Salary: 40% spread (min 20% below midpoint, max 20% above). Equity: 60% (min 30% below, max 30% above). Assume new hires/promos start at min, midpoint for fully performing, max for exceeding. Allow some negotiations, but anchor on pay parity. 5. 𝗛𝗮𝗻𝗱𝗹𝗲 𝗲𝗾𝘂𝗶𝘁𝘆: 𝗩𝗲𝘀𝘁 𝘀𝗺𝗮𝗿𝘁, 𝗿𝗲𝗳𝗿𝗲𝘀𝗵 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝗶𝗰𝗮𝗹𝗹𝘆. The standard has been 4-year grants with 1-year cliff (Bay Area standard). If offering % equity, understand what surveys' "total held" means— you have to adjust for assumed vesting/promos/refreshes to keep ranges conservative yet competitive. For multiple pay regions: Anchor ranges on HQ cost of labor (not living—helps avoid subjectivity), then add a % to adjust for the other regions you pay in. I like ERIERI and Numbeo to find cost of living differences. Also, if you've read this far, I have a surprise for you 👇 I put together a guide on exactly how to build salary ranges + a range creation training deck (based on the exact systems used by top-performing comp and HR teams). 💬 Just 𝗰𝗼𝗺𝗺𝗲𝗻𝘁 "𝗥𝗮𝗻𝗴𝗲𝘀" below, and I’ll message you the link to the Google Drive.

Navigating the world of compensation can be overwhelming, especially with the variety of pay structures available. Whether you're an employee evaluating job offers or a business leader deciding how to structure pay for your team, understanding the differences between pay models is essential. Here is the break down four common pay structures—Hourly Pay, Salary, Commission-Based, and Performance-Based (Bonus/Profit Sharing)—so you can make more informed decisions.   Hourly Pay: This structure compensates employees based on the number of hours worked. It’s common in industries like retail and hospitality, offering flexibility but less income stability. While it allows employees to earn more through overtime, it lacks direct ties to performance. Salary Pay: With a fixed annual income, salaried employees enjoy predictable paychecks, often in corporate or government settings. However, the structure usually doesn’t include overtime pay, and while stable, it might not incentivize employees to exceed expectations. Commission-Based Pay: Commission models are popular in sales-driven industries, where compensation is directly linked to performance. This model offers high earning potential for top performers but carries significant income fluctuation, making it less secure than other structures. Performance-Based Pay (Bonus/Profit Sharing): Combining the stability of a salary with the motivational benefits of performance incentives, this model rewards employees for achieving specific goals or contributing to the company’s success. It strikes a balance between income security and performance rewards, often seen in executive roles or tech companies.   Each pay structure serves a different purpose and fits unique roles. If you're looking for flexibility, hourly or commission-based pay might be appealing. For those seeking stability, salary or performance-based pay could be the right fit. Understanding the nuances of each can help align your compensation model with your career goals or business objectives, driving motivation and long-term success. #paystructures #pay #salary #compensation #humanresources