Who will sit on the compensation committee and help with the build process?
Creating a successful compensation plan requires the full understanding and commitment of senior leaders across your business. Their insights on the levelling process, the formation of the compensation philosophy, and the establishment of salary bands are critical for an inclusive approach. This strategic knowledge helps to build trust across the organisation, ensures alignment with market trends and company values, and ultimately enhances the effectiveness of your overall compensation system.
Furthermore, compensation is an inherently personal and significant aspect of every individual's experience within the organisation. It directly impacts their livelihood and sense of value within the company. As such, it's crucial to get it right, and having diverse perspectives from senior leadership is key to achieving a fair, comprehensible, and impactful compensation plan.
This is a business tool, not just an HR tool. If it's going to be used by the team, it needs to be built by the team.
<aside> 👉 The term ‘compensation committee’ might sound a bit stuffy, so feel free to call it something else. Here are some examples that I’ve seen other organisations use:
The ideal compensation committee should consist of six to eight members. Keeping the committee size within this range ensures effective decision-making and avoids lengthy, circular discussions.
To foster comprehensive representation and balanced viewpoints, the committee should include a leader from each major discipline who represents a particular job function (e.g., VP of Customer Success representing the Customer Team, VP of Engineering representing Software Engineering, etc.).
If senior leadership lacks diversity, consider asking leaders to nominate someone from their team to participate on their behalf or to identify a second to join them on the panel. This approach not only diversifies the committee but also provides valuable development opportunities for emerging leaders within the organisation.
These leaders should: