This past weekend, I had a candid conversation with a business owner who asked me—half joking, half desperate—“So, what’s the right amount to pay people these days?”
My response?
“That’s the wrong question.”
Let’s be honest: compensation is no longer just about what the job should pay. It’s about what your business needs to pay—strategically, competitively, and equitably—to survive and thrive. And the companies that get it are pulling ahead. Fast.
1. Strategic Compensation: Pay With Purpose
Compensation is one of your biggest business investments. So why do so many leaders treat it like a cost to cut instead of a lever to pull?
Strategic compensation starts by aligning your pay philosophy with your business goals. Are you trying to attract top-tier innovators, retain experienced operators, or reward long-term loyalty? Great—then your compensation structure needs to reflect that. If you’re paying the same way you did five years ago, congratulations: you’re building a 2025 business on a 2019 budget.
Questions worth asking:
- Are your variable pay programs driving the right behaviours?
- Is your leadership compensation actually aligned with accountability?
- Is compensation helping you build culture, or is it silently eroding it?
2. Market Data Is a Tool—Not a Compass
Here’s the truth no comp consultant wants to say out loud: market data is a starting point, not a verdict. Salary surveys, benchmarking platforms, and compensation software spit out averages. But people don’t work for averages—they work for organizations that value them.
Yes, you should know where you sit in the market. But more importantly:
- Are you intentionally leading, lagging, or matching?
- Does your pay reflect the realities of your region, your talent pool, and your value proposition?
- And are you communicating this clearly to your team?
Using data without context is like setting sail with someone else’s map. You’ll end up somewhere, but don’t be surprised if it’s not where you meant to go.
3. Intentional Pay ≠ Overpaying
Let’s clear something up: being strategic about compensation doesn’t mean breaking the bank. It means being intentional—about who gets what, and why.
You don’t need to offer Google-level salaries to compete. But you do need to:
- Prioritize roles that drive business value and are hard to replace.
- Define clear salary bands that respect both the market and your budget.
- Be bold enough to say “no” to over-inflated expectations—but back it up with transparency and a compelling employee value proposition.
Throwing money at retention is lazy leadership. Investing smartly is strategic. Know the difference.
4. Pay Equity: Stop Treating It Like a Checkbox
If “pay equity review” is something you do once a year to tick off a compliance box, you’re doing it wrong—and dangerously so.
True pay equity is about consistently evaluating how bias, legacy pay decisions, and systemic gaps are playing out in your business. It’s not just a gender or race issue—it’s a leadership issue. And it’s costing you more than you think.
Employees talk. Glassdoor exists. And Gen Z? They’ll ask each other what they’re making over coffee. If your compensation story doesn’t hold up to scrutiny, your culture—and your brand—will pay the price.
What you need:
- Transparent pay bands (and the courage to explain them).
- Regular, proactive internal audits.
- The guts to fix legacy inequities, even if it’s uncomfortable.
Bottom Line: Your Pay Practices Tell a Story—Make Sure It’s One You’re Proud Of
Strategic, market-informed, and equitable compensation isn’t just a “nice to have.” It’s a business imperative. It’s how you attract talent in a noisy market, retain your top people, and build a culture that fuels results—not resentment.
So if you’re still asking, “What should I pay?”
Ask instead:
“What story do I want our compensation to tell?”
If you’re ready to rewrite that story—CatalystHR is ready to help.
