Aligning Salary to Business Outcomes by Glen Wakeman
Salary management should follow an analytical framework that optimizes value, is considered an investment in the role and generates mutual rewards. This shouldn't be a gut level decision. It must be compatible with overall company objectives.
Clearly define the components of your company that generate enterprise value.
Companies have different stages over their life-cycle. Needs change. Salaries should reflect those priorities. Every role is an investment and every salary should generate a return. Ensure the reward of the role is consistent with the value it generates.
Every cost should add a value to a customer.
Salaries are ultimately reflected in your products' pricing. Your customers will expect value in exchange for the price. Be lean. Avoid the temptation to add unnecessary jobs to your company. If you can't draw a straight line between the role, salary and customer benefit, you probably shouldn't invest the cost.
Employees value consistency when it comes to salary decisions.
Although we all believe we are underpaid, everyone wants to earn their keep and believe they add value. Employees will compare their salaries and note inconsistencies. Minimize inconsistencies and you will minimize conflicts.
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