Budgeting for the Comp Cycle, with Melissa Theiss, Head of People Ops at Kit

Do you want to know what my first experience was when it came to budgeting for the comp cycle?

I got asked by my then HR Manager, to ask around the people in my network, and do some research online, and find out what companies were paying in their review cycle that year.

• We didn’t have salary bands. 

• We didn’t have a pay equity review. 

• We didn’t get market signals of any kind.

We plucked a number out of (seemingly) thin air. We gave it to finance. They said yes or no. Then that got applied in a simple below - 0% / meets - 3% / exceeds 5% type of arrangement.

The most common thing I came across?

We’d (sort of) budgeted for merit increases, but every year, we hadn’t factored in budgets for promotions. The result: we ended up with pay increases for promotions that took away from those who performed well, but not sufficiently enough that the promotion pay increase was actually rewarding. 

We had successfully achieved something that gave people the worst of both words. Uninspiring merit increases and uninspiring promotional increase.

So this episode struck a chord for me, and forced me to reflect on how not to budget for comp cycles.

I sat down with Melissa Theiss to break down something every Head of People has to tackle eventually — budgeting for the compensation cycle.