Asking for Compensation Strategy Changes

Comparing compensation across companies within the same industry is not an easy feat, let alone evaluating an offer for a similar role in a different industry. In tech, total compensation often includes a base salary, a yearly bonus target, equity grants vesting over multiple years (usually non-linearly) and a wide range of perks. Paid time off and leave policies can also be considered a form of compensation.

Talent markets have changed significantly during the last years. While remote and hybrid work is changing the game, local talent clusters and regional talent pools remain contested during times of growth.

Sometimes employees of public companies are unhappy with their compensation. They compare offers, either extended to them directly or shared by acquaintances, and come to the conclusion that their current employer is no longer paying market rate. At least one well-known big tech company is currently going through such a period according to recent news. The same news page mentions employees using internal forums to ask management for compensation adjustments and hints at growing frustration regarding intangible answers. Some may go as far and call it “corp speak”, whatever that means.

I think employees in this scenario are missing a key point. Management executes the compensation strategy and usually has significant discretion in compensating individuals based on proxy metrics for value contribution (for example, performance). The compensation strategy itself, however, is not set and signed off by management. Compensation is a strategic decision made at the board level. The vast majority of boards form a committee exclusively tasked with setting and monitoring the compensation strategy. Other boards assign the task to an existing committee. Management can bring employee satisfaction, or the lack thereof, to the board's attention by making it an agenda item. The board may then ask the compensation committee to evaluate the issue and recommend changes accordingly. But management can not change the compensation strategy without board approval and the scrutiny that comes with that.

Employees unhappy with their company's compensation strategy may consider asking management to bring the issue to the board's attention or find ways to make themselves heard by the board directly. Repeatedly asking management to justify or change the strategy in company-wide forums distracts from more important issues that could be discussed during such high-cost gatherings.

Employees might be doing themselves a disservice by bringing their legitimate concern to the wrong group. They are barking up the wrong tree.