How to Evaluate & Pay Your People Well: A Peek Behind the Pay Check

Do your employees know how you figured out their salaries?
Do they see their future at your company?  
Do you know how to show them it?

Unfortunately, many leaders who have the desire to answer these questions will ultimately answer no.They may say that market research was done and a negotiation took place, but when you dig deeper, most leaders can’t find the language or tools to answer these questions.

With the founder or CEO the only person dealing with compensation, many small-to-medium- sized companies struggle with this.

The common perception is they are figuring out what the company can pay and simply paying as little as possible. Not the best recipe for creating morale, retention, or an awesome culture.

When this is the case, no one is happy. You don't know how to answer questions from your team about their compensation, and no one will bring it up to you. Your team simply bottles up their frustration, looks for other opportunities, and potentially leaves, unless they have the courage to pin the CEO/founder down and request a raise.  

If this sounds familiar, don't worry. This was our leadership team a few weeks ago.

The Valley Before the Peak

Many folks know that a few years ago IMPACT hit a hard spot.  People couldn’t see their futures at the company, and there was an exodus of talent. This exodus led to several organizational changes that have taken the last few years to complete. (For more on the story of the overall transformation, check this out.)

Meanwhile, I was just figuring out what it meant to no longer be an active duty army officer.

This is generally around the same time Bob and I first spoke about me joining the IMPACT team but primarily,  I served as a sounding board and, more importantly, a friend for Bob to grab a few beers with and talk leadership…

But, back to today…

When I joined the IMPACT as COO back in August, Bob (our co-founder & CEO) had several priorities for the leadership team -- and, indirectly, me.  

The top priority was launching IMPACT’s salary tiers, a tool that would allow the team to see their professional and financial future at IMPACT and reconcile many of the issues that plagued the organization in years prior.

Well, I am proud to announce IMPACT has finally moved salary tiers across the finish line, along with an accompanying tool to help guide professional development and growth.  

So, How Did We Do It?

It was easy right? No!  

This was one of the harder tasks I’ve worked on since leaving the Army. People’s compensation and how it is determined is a very personal and emotional topic.  

There is a reason in small companies the CEO or founder is the only ones dealing with employee compensation -- No one else really wants to.

So, needless to say, the road to the finished product was long. The team worked on it a few years ago, but never got their idea on paper and to the team. Then, at the first leadership team meeting I attended, we ran out of time to discuss it and decided to set up a separate meeting. What fun!

Ultimately, we met at 5:30 p.m. on a Wednesday evening. Bob brought pizza and some ideas based on HubSpot’s version of salary tiers.

The Skills Sheet

To say that I was uncomfortable with this topic would be an understatement.  

I don’t generally feel uncomfortable. I like tackling the hard stuff, but this was beyond hard. We would be pulling the curtain back and letting our entire team understand how we determine what we pay them for their work; in ways, how we “graded” their work and skill.  

I was afraid this could create a Hunger Games scenario, where our team would compete against each other and kill IMPACT.

Luckily, Bob is way smarter than I am, and he was able to reign in my fears and get the team to see his vision:  

“We aren’t building a tool to determine your salary. We are building a tool to guide your professional development. It will also show you the impacts of your growth through increased salary and promotions.”

After coming to this realization, we were able to reverse engineer how Bob currently came up with the team’s salaries and developed the tool we are calling The Skills Sheet.  

The Skills Sheet/Matrix is an overview of the five core areas we use to evaluate someone on our team, and how we want people to develop and progress across those skill sets.

The five core areas are:

1. Leadership -- Pretty self-explanatory.
2. Digital marketing knowledge -- This is an understanding of the tools, tactics, and techniques we use to deliver.
3. Communication -- How effectively you communicate and how you take feedback.
4. Driving customer success -- How you deliver for our clients.
5. Job function -- These are specific to your role in the organization, based on job description.

(Not rocket science. I think HubSpot has very similar, if not the same general areas.)  

We then identified six levels and assigned specific requirements for each -- 1 being a beginner and 6 being a rockstar.  

Guess what? You can get this skillset to use at your organization right here!

How We Use the Skill Sheet

Overall, this tool empowers IMPACT team members to have more productive discussions around their professional development during 1-on-1s with their managers.  Not only can our folks assess themselves, they can have conversations with their manager about how to get better.  

They can develop plans for growth that aren’t simply, “Earn more HubSpot certifications…” (Though those are obviously quite valuable.)

For those of us in leadership or management, we use this tool -- along with a simple calculator that takes into account the weight of each area (different roles at IMPACT carry different weights in each area) -- to evaluate our team.

The score from the evaluation coincides with a salary band and when a team member crosses a threshold to a new level on our tiered structure, they get promoted!

Getting Feedback

Prior to launching this new tool, we decided to have a small focus group to get some last minute input from our team.

We didn’t need to have a focus group. We could have simply launched and been done, but that wouldn’t have been IMPACTy. Just like we value the opinion and thoughts of our clients, we value and respect the opinion and thoughts of our team. We wanted to ensure what our leadership team had come up with actually answered the mail, rather than launching and learning we missed our target…

So, we grabbed a strategist, developer, designer, and a marketing manager and our Director of Talent, Natalie Davis, and I walked everyone through the tools.

Initial feedback from the group was that they loved it, but there were some concerns.

We had a discussion about sharing the tiers/job levels of each team member with the entire organization thinking this would motivate folks to get after professional development to get promoted, but the feedback we received was loud and clear. Don’t do that!

Good thing we learned that now and not down the line.

There were also some questions about the skills and criteria laid out in each position level that made us realize they could use some clearer language. This was also feedback we were happy we received early on to avoid confusion.

Overall, the collective group felt the tools showed them a path to six figures and a way to develop. So, we could move on to the next step.    

The Roll-Out

So, now can we launch this at the next all-hands? NO!

As we discussed a bit earlier, compensation and professional growth are very personal topics.  An all-hands meeting is a great way to launch a broad idea or reinforce our vision, but it isn’t intimate enough of a setting to launch something like this.

We decided to launch this during each of our team's retrospectives.

Along with our Director of Client Services, Brie Rangel, Natalie, and I took 30 minutes of everyone’s meeting to present the new tool. We answered questions and joked with our teams. We started getting really good at knowing the questions folks would ask, so we asked them ourselves.

After our final presentation, I gave Natalie a huge high-five as we had accomplished one of the key results for IMPACT and most importantly, the team was happy!

The Reception

Feedback has been amazing!  Managers love the tool because it helps them focus their one-on-one meetings with team members and our team members love it because they can see how to get where they want.  

The best part, though, was receiving a slack from a member of our team thanking me and the leadership team for creating this for them. Leaders don’t often get thank yous, but when we do, it feels amazing!

Regardless of the reception so far, we are calling this the “beta” version because we know it will morph and grow as we implement the tool, but we couldn’t be happier.

Why it Worked?

Because it’s transparent. Compensation and growth in an organization are usually closely held secrets; known to senior leaders but by the time it makes its way down to team's, get lost...

Simply understanding your pathway to promotions and salary increases is a huge thing, but it isn’t the only reason we invested the mental and emotional energy of our leaders to develop this.

Rather than simply having evaluations and reviews, we have built a tool that our team and their leaders can use to create career development plans.  

We’ve built a set of tools that allow our team to communicate and design the future they want.  We’ve put their future in their own hands and are leveraging their managers to serve as coaches to help them achieve their goals!  

There are also some second and third order effects that have come from this exercise.

For example, it has shown our team that the leaders of IMPACT do what they say and devote tons of time and effort to its growth. It has allowed us to develop our managers even further and has given them more responsibility for their teams.

Our team knows how to achieve higher compensation and earn promotions. They know what we think is important and how we determined the number on their paychecks. They know there’s room to grow and advance in their careers here at IMPACT, and most importantly, they know we’re invested in making that happen!

Want the same for your team?

You can have it! As I mentioned earlier, we’ve packaged The Skill Sheet/Matrix and calculator into our Career Salary Tiers Template that you can download and start implementing at your organization right away.

Hit the button to get your free copy now!