The Compensation Engine: Building Your Pay-for-Performance System

Hot take time. 🔥 Building a performance framework is simple compared to what comes next.

While crafting performance measurement tools is largely about design thinking and user empathy, connecting those tools to actual money? That's when things get interesting. That's when your lovely theoretical framework meets the harsh reality of budgets, market forces, and the CFO's raised eyebrow.

The Problem That Keeps Me Up at Night

Due to the fact this is such a company-wide and crucial process, I became obsessed with a new user story: We want a compensation system that takes subjective performance inputs and transforms them into objective, fair, and financially sustainable salary decisions — all while maintaining trust and transparency.

This isn't just a process challenge. It's a product challenge of the highest order. You're building a system that needs to be mathematically sound enough to satisfy Finance, transparent enough to maintain employee trust, and flexible enough to handle the messy realities of human performance.

The User Research That Nobody Talks About

When we started building our compensation engine at Whereby, I did something unusual: I researched failure stories. Not the success stories everyone loves to share at conferences, but the spectacular failures. The systems that created revolt. The processes that led to mass exodus. The frameworks that looked good on paper but created chaos in practice.

What I discovered was illuminating. Most compensation systems fail not because of bad math, but because of bad user experience. Managers didn't trust black-box algorithms. Employees felt disconnected from the process. Finance teams were frustrated by unpredictable outcomes.

The pattern was clear: we needed to build something that worked for three very different user groups — employees, managers, and finance — while maintaining a single source of truth. In product terms, we needed a platform, not just a tool.

The Calibration Product: Our Quality Assurance System

Remember how I mentioned calibration in the last post? Well, here's where it transforms from a nice-to-have check into a critical system component. Think of calibration as your QA process — it's what prevents garbage in, garbage out.