Top performers should not be compensated according to the value of mid-level talent. Here’s what you should look at, instead.

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When firms look at what they should be paying their employees, they often use too narrow a lens. Oftentimes, they simply reflect on what they paid last year, whether employees deserve an increase, and how the firm is doing. While these are relevant criteria to consider, there are two additional factors that should be included when it comes to compensating top talent:

1. Consider how your employee is positioned in the marketplace. What will happen if—or, more likely, when—a recruiter calls them? If they bring the value you think they’re worth, but another firm believes the employee is worth, say, 30% more, you can easily lose key talent. It’s best to understand what the market is for these roles in terms of years, degrees, experience, etc.

2. Avoid using salary surveys to determine compensation. You’ll often find numbers for median-level employees and even the top 10% of talent. But when you look at your best talent, it’s very likely that they’re in the top 1%. If that’s the case, their worth isn’t on the charts; they could easily be worth exponentially more. If they are adding value, you want to pay them in a way that reflects that value.

Be careful when following the skew toward the average when it comes to surveys and other available information. The top 1% is not included, and trying to bind the value of the 1% with that of lower performers is a good way to lose your best talent.

If you’d like to meet for a free consultation about your own employees’ compensation, have any questions, or need further information, feel free to reach out to us. We’d be more than happy to help you figure out how to best reward the value provided by your top talent. We look forward to hearing from you soon.

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