Compensation & Salary Benchmarking

Build competitive compensation plans using market data, salary bands, equity, bonuses, geographic pay adjustments, and retention risk scoring.

1kalin@1kalin

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Compensation & Salary Benchmarking Planner

Build data-driven compensation structures that attract talent without overpaying. Covers base salary bands, equity/bonus frameworks, geographic differentials, and total rewards packaging.

When to Use

Building or revising salary bands for any role
Preparing for hiring sprints and need market-rate data
Conducting annual compensation reviews
Designing equity/bonus/commission structures
Benchmarking against competitors to reduce turnover

How It Works

When asked to build a compensation plan, follow this framework:

1. Role Architecture

Define job levels and salary bands:

Level	Title Pattern	Base Range (US)	Equity %	Bonus Target
L1	Associate / Junior	$45K-$70K	0-0.01%	0-5%
L2	Mid-level	$70K-$110K	0.01-0.05%	5-10%
L3	Senior	$110K-$160K	0.05-0.15%	10-15%
L4	Staff / Lead	$150K-$210K	0.1-0.3%	15-20%
L5	Principal / Director	$190K-$280K	0.2-0.5%	20-30%
L6	VP / C-level	$250K-$400K+	0.5-2%+	30-50%+

2. Geographic Differentials

Apply cost-of-labor multipliers (not cost-of-living):

Tier	Markets	Multiplier
Tier 1	SF Bay, NYC, London	1.0x (baseline)
Tier 2	Seattle, Boston, LA, Chicago	0.90-0.95x
Tier 3	Austin, Denver, Manchester, Berlin	0.80-0.85x
Tier 4	Remote US/UK secondary markets	0.70-0.80x
Tier 5	Eastern Europe, LATAM, SEA	0.40-0.60x

3. Total Compensation Package

Break down total rewards:

Cash Compensation

Base salary: 60-80% of total comp (varies by seniority)
Performance bonus: 5-30% of base
Commission (sales roles): 40-60% of OTE

Equity Compensation

Startup (pre-Series B): 0.01%-2% based on level, 4-year vest, 1-year cliff
Growth stage: RSUs, lower % but higher dollar value
Public company: RSU grants refreshed annually

Benefits & Perks (typically 20-35% on top of base)

Health insurance: $6K-$24K/yr employer cost per employee (US)
401(k)/pension match: 3-6% of salary
PTO: 15-25 days (US), 25-33 days (UK/EU statutory + company)
Learning budget: $1K-$5K/yr
Remote stipend: $100-$250/mo
Parental leave: 12-26 weeks (competitive)

4. Pay Equity Audit

Run these checks quarterly:

Compa-ratio by role: Actual pay ÷ midpoint of band. Target: 0.90-1.10
Gender pay gap: Compare median comp by gender within each level
Tenure compression: Are new hires making more than 2-year veterans? Fix with retention adjustments
Band penetration: % of employees above 1.0 compa-ratio (flag if >30%)

5. Annual Review Cycle

Month	Action
Jan	Market data refresh (Levels.fyi, Glassdoor, Radford, Mercer)
Feb	Manager calibration sessions
Mar	Budget allocation (typically 3-5% of payroll for merit increases)
Apr	Communicate adjustments, effective date
Jul	Mid-year equity refresh grants
Oct	Prepare next year's comp budget proposal

6. Offer Benchmarking Checklist

Before extending any offer:

Check 3+ data sources (Levels.fyi, Glassdoor, Payscale, LinkedIn Salary)
Confirm geographic tier and apply multiplier
Calculate total comp (base + bonus + equity annualized + benefits value)
Compare to internal peers at same level (±10% band)
Document justification if above band midpoint
Get sign-off from hiring manager + finance/HR

7. Retention Risk Scoring

Factor	Weight	Score (1-5)
Below market rate (>10% under)	25%
Time since last raise (>18 months)	20%
Flight risk signals (LinkedIn active, disengaged)	20%
Critical role / hard to replace	20%
Tenure > 3 years with no promotion	15%

Score > 3.5 = immediate retention conversation needed Score 2.5-3.5 = include in next review cycle, prioritize Score < 2.5 = monitor quarterly

8. Commission & Sales Comp

For revenue roles, design OTE (On-Target Earnings):

Base:Variable split: 50:50 (hunters), 60:40 (farmers), 70:30 (CS/AM)
Accelerators: 1.5-3x rate above quota (motivates overperformance)
Decelerators: 0.5x rate below 80% quota (protects company)
Clawback policy: Define for churned deals within 90 days
SPIFs: Short-term incentives for strategic pushes ($500-$5K per qualifying action)

Key Metrics to Track

Offer acceptance rate: Target >85% (below = comp is off-market)
Regrettable attrition: Target <10% (above = retention issue)
Time to fill: If increasing, may signal comp competitiveness problem
Cost per hire: Include recruiter fees, signing bonuses, relocation
Revenue per employee: Benchmark against industry ($200K-$400K SaaS, $150K-$250K services)

Data Sources (2026)

Levels.fyi — Best for tech roles, real verified data
Glassdoor — Broad coverage, self-reported
Payscale — Small business focus
Radford (Aon) — Enterprise-grade, paid surveys
Mercer — Global comp data, paid
LinkedIn Salary Insights — Good for role-specific ranges
BLS Occupational Employment Statistics — Government baseline

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