Data is inherently flawed — it lags the labor market, exact job matches aren’t always available, and it doesn’t speak to company affordability. This detailed guide introduces how to determine the relation of available data to your company and more.
1. 1Copyright 2017, Advanced-HR Inc., All Rights Reserved. 1Copyright 2017, Advanced-HR Inc., All Rights Reserved.
www.advanced-HR.com
info@advanced-hr.com
By: Dee DiPietro
CEO, Advanced-HR, Inc.
Where
Data
Fails
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Benchmarking is a fantastic first step in
compensation planning, but it does not provide
an answer to recruiting and retention needs.
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PRO TIP: Determine how data
relates to your company as a starting
point for your labor market strategy.
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Data
Company
VS
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Companies are unique and complex in growth
and funding. Market data will only show what is
typically seen in various company stages.
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Typical Benchmarks by Stage of Development
Total Capital Raised
Funding Round
Number of Employees
Fully Diluted Shares
Est. Annual Revenue
Est. Company Value
Developmental Phase
Early Stage
Seed and Series A
<$10M
<25 Employees
6M – 20M
<$2M
<$31M
Product Definition
Product Development
Later Stage
Series C or Later
$81M – $178M
201 – 450 Employees
90M – 153M
$40M – $95M
$285M – $627M
Shipping Product
Profitable
Mid Stage
Series B to Early Series C
$20M – $53M
37 – 105 Employees
20 – 49M
$2M – $20M
$45M – $152M
Product Development
Shipping Product
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PRO TIP: Use a capital raised
dataset for companies with <$25M in
revenue and a revenue data set for
companies with >$25M in revenue.
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Data
Real-time
Recruiting
VS
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The data collection process leaves a lag between
existing data and real-time. When the market
heats up, recruiters may push for stronger offers.
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PRO TIP: Couple recruiter feedback
with your market dataset for the most
current working knowledge of the
competitive market.
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Data
Market
Strategy
VS
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Each survey varies in terms of what it provides
and each has advantages and disadvantages:
SPARSE DATA
LIMITED JOB TITLES
COST PROHIBITIVE
SPECIFIC JOB TITLES
PLENTY OF DATA
SPECIALIZED SURVEYS
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PRO TIP: Most survey outputs are
usable if you understand what the
data is saying and how it relates to
your labor market.
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25th
50th
100th
75th
$145K - $170K
Public Company
Labor Market Data
$175K - $200K
Apple, Facebook,
Amazon, LinkedIn
Estimated at the 75th to
100th ++ Percentile
$190K - $225K
Google
Estimated at the 95th to
100th ++++ Percentile
Market Data
Percentile
Position base salary against data depending on competition:
Q3 ’17 Private Company
Median Base Salary 3% higher
than Public Company Data
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PRO TIP: Private company base
salaries are not primarily based on
data, but on specific labor market
competition for top talent.
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Data
Forecasting
VS
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Private companies typically have resource
constraints so affordability for current employees
and projected hires drives the budget.
$
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Forecasting requires two key strategies to
realize the required budget:
A RETENTION
PLAN FOR
EMPLOYEES
CRITICAL TO
COMPANY
SUCCESS
CASH & EQUITY
REQUIRED TO
COMPETE IN THE
COMPANY’S
SPECIFIC LABOR
MARKET
2.1.
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PRO TIP: Evaluate the
competitiveness of the cash/equity
mix based on the anticipated value of
the equity in the package.
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Understand how the expected return on equity
impacts the cash offer. This is important as a
company transitions to a heavier cash strategy
necessitated by reduced equity offerings.
Early Stage Mid Stage Late Stage
E
Q
U
I
T
Y
C
A
S
H
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PRO TIP: Retention grants for all
employees is a common approach,
however, it is typically not scalable
with growth of a company.
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Effective retention requires strategy for when
to award and how to vest grants ensuring
employees with critical skills stay.
Typical Staff Distribution
Cash Retention Target
Equity Retention Target
50%+
Regular Individual
50th Percentile +
Pending pool affordability;
discretionary at 10% of new
hire range ever 3-4 years
20% - 30%
Important Individual
50th Percentile +
Annual grant at 10% of new
hire range every 1-2 years
10% - 20%
Critical Individual
75th Percentile +
Annual grant at 25% of new
hire range every 1-2 years
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Data fails when a company
does not determine how their
unique needs relate to a
dataset.
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Don’t let the dataset fail you. Follow these steps:
DETERMINE
HOW YOUR
COMPANY
RELATES TO THE
COMPETITIVE
MARKET
2.
LEVERAGE
MARKET DATA
AS A REFERENCE
POINT
1. FORMULATE AN
EFFECTIVE PAY
STRATEGY
TARGETED AT
TALENT
RETENTION
3.
COMMUNICATE
YOUR COMPANY
VALUE
PROPOSITION
4.
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PRO TIP: Both HR and Finance
need to become aligned with the
data, modeling, and forecasting grow
the company effectively.
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Want help? Option Driver is a platform
designed specifically for startups to use best
practice data and compensation plan effectively.
ANALYZE BUDGETBUILDINPUT REPORT
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Compensation plans without the consulting cost.
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