In your business, certain functions are more important than others. And fair or not, some people on your executive team are more important than others.
Their compensation should reflect that.
That may sound like common sense, but based on our research, we find that far too many companies do just the opposite, averaging out executive compensation across their entire team in search of “fairness.” There’s no set rule here—every company will need to figure out the right formula.
- Getting the formula right isn’t rocket science, but it will take some focus. You’ll need to weigh:
- What stage of growth your company is in (e.g., early stage and not yet profitable vs. mature)
- Your industry and business model
- Compensation benchmarks for your industry and specific roles
- Your ownership model (e.g. Venture Capital vs. Private Equity or Family Owned)
- Your overall balance sheet
Read the complete article here.