Compensation Increase Process Template

How We Assess Compensation Increases

Our Compensation Philosophy

At our company, we believe that fair and competitive compensation is critical to attracting and retaining top talent, and to supporting the success and satisfaction of our employees.

We want compensation to be a non-issue so employees aren’t worried about when, how, and why they get a raise.

What's behind our strategy:

• Reward performance: Measuring performance and intentionally rewarding high performers, not tenure.
• Fairness: Remove the burden of asking for a raise from the employee and ensure compensation is based on performance.
• Market competitiveness: Ensure that we are calibrating our compensation to market standards to attract top talent.
• Time: Avoid time wasted or emotional energy spent pitching a raise and negotiating compensation.
• Fiscal responsibility / cash forecasting: Ensure we have the people and capital to build a healthy, high growth, and enduring long-term company.
• Attracting future hires: We want our compensation to be competitive to attract future hires. These employees need a clear path for growth and transparent expectations of what success looks like in their role.
• Transparency: Fairly managing performance requires a lot of work, and becomes increasingly difficult at scale. We have to feel good about our methodology for compensation so we can defend decisions.
• Gender and racial pay equity: Women and people of color are far less likely to advocate for themselves and negotiate a higher salary.

How Often Are Compensation Increases?

We want to ensure that all employees are paid fairly so you can focus on the work you love rather than worrying about your compensation. We think it’s unfair to expect employees to ask for raises and wonder if/when it happens. We are also misaligned with the idea that everyone should wait for an annual incremental raise.

When we evaluate compensation:

Our team evaluates compensation twice per year in April and October. Your manager and head of HR meet regularly to ensure that team and individual performance is on track and everyone has the resources they need to be successful. Employees that are absolutely crushing it, meeting goals, and taking on additional responsibilities will be considered to receive a compensation adjustment to reflect their outstanding performance.

High-performing employees can expect to receive a base salary performance increase annually (in either the April or October evaluation period). If you're curious about how you're doing in your role, ask your manager, check out your scorecard, or review past self-reflection comments or feedback.

Treat your 90-day check-ins as an opportunity to evaluate your performance and your goals to make sure that everything is still properly aligned. If a pay change occurs, it will do so in conjunction with the bi-annual compensation evaluation.

How We Ensure Fair Pay

This standard operating procedure (SOP) outlines the steps that we follow to adjust compensation, and it describes our approach to raise timelines and eligibility.

How we make compensation decisions:

1. Before making any adjustments to compensation, we review and assess the market data for relevant positions and industries, and we benchmark our compensation against comparable organizations.
2. We consider factors such as the employee's performance, experience, skills, and potential, as well as the value of the position and the company's financial performance and budget.
3. We discuss the proposed compensation adjustment with the employee, and we provide them with clear and transparent information about the rationale and process for the adjustment.
4. We obtain the employee's written consent to the compensation adjustment, and we document the change in their employment contract or offer letter.
5. We update the employee's salary and benefits in our payroll and HR systems, and we ensure that the change is reflected in their pay stub and other relevant documents.
6. We communicate the compensation adjustment to relevant stakeholders, including the employee's manager, team members, and HR.
7. We review and update our compensation policies and practices on an ongoing basis, and we will ensure that they are fair, competitive, and aligned with our business goals and objectives.

As a company, we believe that employees should be eligible for raises based on their performance, experience, and potential, and we aim to provide regular and transparent feedback on their progress and contributions. We also believe that employees should be given the opportunity to participate in professional development and career advancement programs to support their growth and success. By following this SOP, we will ensure that our approach to compensation is fair, transparent, and aligned with our business goals and values.