Your Compensation Strategy is Your Pricing Strategy: Part II - Building and Scaling Your Framework

Time to turn strategy into systems ⚙️. In Part I, we explored how remote work and global talent competition has transformed compensation from a local HR function into a complex strategic challenge. You've identified your talent market dynamics, understood your competitive landscape, and begun thinking about your value proposition.

Now comes the implementation challenge: building a systematic framework that can handle this complexity while remaining practical and scalable.

The Challenge of Building Systematic Frameworks

The complexity we discussed in Part I creates a real operational challenge. How do you build compensation systems that are sophisticated enough to handle global competition and multi-dimensional talent markets, while still being practical for hiring managers to use and fair for employees to understand?

The best frameworks balance five critical characteristics:

1. Systematic - Consistent logic that reduces bias and increases fairness. This doesn’t mean the entire system is identical and treats all folks the same, but it does mean that each difference, possible exception, and variation us both understood and clearly documented.

2. Scalable - Works whether you're hiring 10 people or 100 people per year, and reflects your company’s budget and hiring goals.

3. Defensible - Based on clear reasoning that stands up to internal and external scrutiny

4. Flexible - Can adapt to market changes without complete rebuilds, and allows for revisitation for strategic purposes

5. Strategic - Aligned with your business goals rather than just administrative convenience

The Multi-Layer Framework Approach

In my experience, the challenge many teams face is that traditional compensation approaches weren't designed for this level of complexity. Building something that handles today's realities requires more sophisticated thinking.

Think of your compensation framework like a well-designed system where each component serves a specific purpose and they work together to handle complexity systematically.

Layer 1: Market Intelligence Foundation

The foundation of any modern compensation framework has to be sophisticated market intelligence. But the challenge now is that "market data" isn't straightforward when your competitive set spans multiple geographies, industries, and company stages.

Building Comprehensive Market Intelligence:

You can buy both compensation data and market intelligence, but if you are wanting to build something in house, you can also do market research yourself using multiple sources and develop your own basis of compensation data. This is useful because you can be more reactive than some market tools allow, as they are retroactively adding in data in many instances (Not all! Many new tools are much more dynamic now, and I encourage you to check them out).

Segmented Analysis: Instead of looking at broad categories like "software engineers," analyze specific segments like "senior full-stack engineers at remote-first SaaS companies with 50-200 employees"

Competitive Set Definition: Identify the 10-15 companies you actually compete with for talent (often different from your business competitors)

Dynamic Tracking: Monitor how compensation in your competitive set evolves, not just static benchmarks

Navigating Data Source Complexity:

As I said, premium data sets (Radford, CandorIQ, ERI) provide comprehensive coverage and industry credibility, but can lag market movements

Real-time sources (levels.fyi, Glassdoor, AngelList) capture current market dynamics but require careful filtering and validation

Direct competitive intelligence through your hiring process gives you the most accurate picture of what you're actually competing against, but requires a lot of work to find the data and collate it in a logical way.

The key insight: treat market intelligence as an ongoing strategic function, not a once-per-year benchmarking exercise.