Even at a time when it might seem there is a surplus of talent available, employers need to approach remuneration from a position of knowledge to attract the best and indeed, protect themselves from paying too much.
With this in mind, we recently brought together 60 technology leaders to discuss which parts of compensation matters most to candidates, how employers are devising their packages and what can be done to improve reward overall.
The results, we feel, are worth sharing more broadly.
To prepare for the webinar we collected data from 225 c-suite executives in either general or sales management. To give colour, we talked to people with titles ranging from CEO and Managing Director to SVP, EVP, VP, CRO and CCO.
The importance of base
Through hundreds of conversations with high performing candidates, we have been told that base salary is the most important part of compensation.
But what is driving base salaries?
We concluded from the research that revenue responsibility is the largest single contributing factor. 80% of the 60 leaders on the webinar agreed. Profit size, relative growth, number of personnel, company ownership structure and maturity all play a part, but nothing beats revenue responsibility.
While our data shows that base salary increases as revenue responsibility increases, there are some clear steps and a tapering-off point.
Sales leadership sees a significant jump when revenue responsibility moves from sub £75m into the £75m to £100m range. At this level, building and executing a strategy is often done by one person and can be highly complex and taxing. Base then tapers off when revenue responsibility rises above £100m. We think this is because there are more leaders involved and the focus is purely on execution. Although there may be more revenue responsibility, the role is less complex.
The trend for general management, on the other hand, is a steady increase in base to the £100m revenue mark, beyond which it starts to flatten out. We did, though, see a significant jump in the variable reward and non-cash items.
Increasing base salary
We all know there are two fundamental ways an employee can go about increasing their base salary: negotiate a pay rise from their current employer or find a new job paying more. This is important when thinking about attracting and retaining talent.
We looked at all the searches we had run over the last 12 months and found that those moving from a job increased their base on average by 16%. We know that when running a search, we expect to have to present something more than 20% overall to get someone genuinely interested.
At a time when there might be more people between jobs on the market, it is also worth noting that those moving from no job had their base decrease by 13% from their most recent role.
The conversation about variable
Variable and non-cash items depend a lot on circumstances, which makes like-for-like comparison difficult.
That said, we can say that variable rewards at senior level tends to be between 50-100% of base. For general management, this is more likely to be 50%-80% and for sales, 100% – although 100% in software and 40-100% in content and data sales is more common.
LTIP’s, stock and shares seem to come in where the base is around £150k+ or where a company is at early stage. We plan to do more work on producing insights on variable compensation later this year.
So, in summary, if you are thinking about recruiting to senior positions in the months ahead…
- Base salary might be more important than you think
- Revenue responsibility has the biggest impact on base salary
- Attracting talent from an existing role will likely need an increase in base of 16%+
- Non-cash items and variable reward only become swaying factors when base is in excess of £150,000
This is just some of the information that we can share on attracting and retaining a high-performing team. In a future webinar and post, we will be looking at how to hire and develop people with the right behaviours, which we know is the biggest downfall when it comes to leadership retention.
Please let us know via the contact page if you’d like to join.