May 10, 2024

Why Your 50+ Org Needs Compensation Management

Comp systems aren’t just for large companies with Total Rewards teams.

Why Your 50+ Org Needs Compensation Management

Why Your 50+ Org Needs Compensation Management

Comp systems aren’t just for large companies with Total Rewards teams.

Shelby Wolpa recently released her 2024 People Tech Systems Guide (shameless plug: CandorIQ is featured) and in it she shares a systems roadmap, a breakdown of which types of software solutions companies of different sizes should invest in. Shelby recommends compensation management software for 50+ employee orgs, and I completely agree. 

I talk a lot about how overwhelming compensation management can be for small businesses and different ways to make it more manageable, but at a certain point (50+ employees…), investing in the right software will be your best move. This blog will breakdown why I believe this, what could happen if you don’t invest in compensation management, and how you can start small.

Why it’s important to invest in comp systems early

Often, small to mid-sized organizations assume that compensation systems are reserved for larger enterprises with dedicated Total Rewards teams. However, this couldn't be further from the truth. As your organization grows past the 50-employee mark, the need for structured compensation management becomes increasingly apparent, impacting everything from hiring to employee retention and overall company growth (more on that in the next section).

Building out the comp bands & levels is foundational to hiring, scaling, retention, company growth.

One of the first signs that you need a structured compensation system is when you want to retain and reward employees in a more structured or transparent manner. Comp bands and levels provide a framework for understanding career progression, helping employees see a clear path forward within your organization. These become crucial as you start hiring in larger volumes or across different countries and geographies, where varying cost-of-living standards and market rates can complicate compensation decisions.

What happens if you don’t?

Failure to implement a structured compensation system can lead to a host of issues:

  • Hiring the wrong talent due to misaligned pay structures can result in high turnover rates and wasted resources. 
  • Overpaying on hiring and overspending your headcount budget can lead to financial strain and operational inefficiencies. 
  • Inconsistent pay across employees can breed resentment and reduce morale.
  • Without a clear career ladder, employees may feel stagnant and seek opportunities elsewhere, increasing churn risk and overall unhappiness within the organization.

Moreover, the lack of alignment between company goals, employee performance, and pay can hinder growth and performance.

How you can start small

Starting small is key. You can begin by defining your pay strategy and job architecture, including bands and levels. Consider starting with one job family—maybe your largest team or where you’ll do the most hiring. This incremental approach allows you to build a strong foundation for your compensation management system, ensuring that it grows with your organization. Read more tips on how to start small here.

As your organization grows past the 50-employee mark, implementing a structured compensation system becomes crucial for hiring, scaling, retention, and overall company growth. Starting small and building a strong foundation will set you on the path to effectively managing your organization's compensation needs. When you’re ready to start, let’s chat.

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