Compensation & Salary Benchmarking Planner

Build data-driven compensation structures that attract talent without overpaying. Covers base salary bands, equity/bonus frameworks, geographic differentials, and total rewards packaging.

When to Use

• Building or revising salary bands for any role
• Preparing for hiring sprints and need market-rate data
• Conducting annual compensation reviews
• Designing equity/bonus/commission structures
• Benchmarking against competitors to reduce turnover

How It Works

When asked to build a compensation plan, follow this framework:

1. Role Architecture

Define job levels and salary bands:

| Level | Title Pattern | Base Range (US) | Equity % | Bonus Target | |-------|--------------|-----------------|----------|--------------| | L1 | Associate / Junior | $45K-$70K | 0-0.01% | 0-5% | | L2 | Mid-level | $70K-$110K | 0.01-0.05% | 5-10% | | L3 | Senior | $110K-$160K | 0.05-0.15% | 10-15% | | L4 | Staff / Lead | $150K-$210K | 0.1-0.3% | 15-20% | | L5 | Principal / Director | $190K-$280K | 0.2-0.5% | 20-30% | | L6 | VP / C-level | $250K-$400K+ | 0.5-2%+ | 30-50%+ |

2. Geographic Differentials

Apply cost-of-labor multipliers (not cost-of-living):

| Tier | Markets | Multiplier | |------|---------|------------| | Tier 1 | SF Bay, NYC, London | 1.0x (baseline) | | Tier 2 | Seattle, Boston, LA, Chicago | 0.90-0.95x | | Tier 3 | Austin, Denver, Manchester, Berlin | 0.80-0.85x | | Tier 4 | Remote US/UK secondary markets | 0.70-0.80x | | Tier 5 | Eastern Europe, LATAM, SEA | 0.40-0.60x |

3. Total Compensation Package

Break down total rewards:

Cash Compensation

• Base salary: 60-80% of total comp (varies by seniority)
• Performance bonus: 5-30% of base
• Commission (sales roles): 40-60% of OTE

Equity Compensation

• Startup (pre-Series B): 0.01%-2% based on level, 4-year vest, 1-year cliff
• Growth stage: RSUs, lower % but higher dollar value
• Public company: RSU grants refreshed annually

Benefits & Perks (typically 20-35% on top of base)

• Health insurance: $6K-$24K/yr employer cost per employee (US)
• 401(k)/pension match: 3-6% of salary
• PTO: 15-25 days (US), 25-33 days (UK/EU statutory + company)
• Learning budget: $1K-$5K/yr
• Remote stipend: $100-$250/mo
• Parental leave: 12-26 weeks (competitive)

4. Pay Equity Audit

Run these checks quarterly:

1. Compa-ratio by role: Actual pay ÷ midpoint of band. Target: 0.90-1.10
2. Gender pay gap: Compare median comp by gender within each level
3. Tenure compression: Are new hires making more than 2-year veterans? Fix with retention adjustments
4. Band penetration: % of employees above 1.0 compa-ratio (flag if >30%)

5. Annual Review Cycle

| Month | Action | |-------|--------| | Jan | Market data refresh (Levels.fyi, Glassdoor, Radford, Mercer) | | Feb | Manager calibration sessions | | Mar | Budget allocation (typically 3-5% of payroll for merit increases) | | Apr | Communicate adjustments, effective date | | Jul | Mid-year equity refresh grants | | Oct | Prepare next year's comp budget proposal |

6. Offer Benchmarking Checklist

Before extending any offer:

• [ ] Check 3+ data sources (Levels.fyi, Glassdoor, Payscale, LinkedIn Salary)
• [ ] Confirm geographic tier and apply multiplier
• [ ] Calculate total comp (base + bonus + equity annualized + benefits value)
• [ ] Compare to internal peers at same level (±10% band)
• [ ] Document justification if above band midpoint
• [ ] Get sign-off from hiring manager + finance/HR

7. Retention Risk Scoring

| Factor | Weight | Score (1-5) | |--------|--------|-------------| | Below market rate (>10% under) | 25% | | | Time since last raise (>18 months) | 20% | | | Flight risk signals (LinkedIn active, disengaged) | 20% | | | Critical role / hard to replace | 20% | | | Tenure > 3 years with no promotion | 15% | |

Score > 3.5 = immediate retention conversation needed Score 2.5-3.5 = include in next review cycle, prioritize Score < 2.5 = monitor quarterly

8. Commission & Sales Comp

For revenue roles, design OTE (On-Target Earnings):

• Base:Variable split: 50:50 (hunters), 60:40 (farmers), 70:30 (CS/AM)
• Accelerators: 1.5-3x rate above quota (motivates overperformance)
• Decelerators: 0.5x rate below 80% quota (protects company)
• Clawback policy: Define for churned deals within 90 days
• SPIFs: Short-term incentives for strategic pushes ($500-$5K per qualifying action)

Key Metrics to Track

• Offer acceptance rate: Target >85% (below = comp is off-market)
• Regrettable attrition: Target <10% (above = retention issue)
• Time to fill: If increasing, may signal comp competitiveness problem
• Cost per hire: Include recruiter fees, signing bonuses, relocation
• Revenue per employee: Benchmark against industry ($200K-$400K SaaS, $150K-$250K services)

Data Sources (2026)

• Levels.fyi — Best for tech roles, real verified data
• Glassdoor — Broad coverage, self-reported
• Payscale — Small business focus
• Radford (Aon) — Enterprise-grade, paid surveys
• Mercer — Global comp data, paid
• LinkedIn Salary Insights — Good for role-specific ranges
• BLS Occupational Employment Statistics — Government baseline

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