In the economic theory, wages are linked to the value created by the employee. The problem is that value creation is very hard to measure.

Sometimes someone’s productivity is simple to assess (eg: if you manufacture products all by yourself). But once you ...

The core principles of any good compensation policy:

• Being as objective as possible: this ensures fairness and acknowledges a basic truth: people talk. The goal is to ensure fairness, real and perceived (more or less the same package for the same position, all things b...

• First, employees are very impacted by differences of salary within their peer groups.
• Second, this effect does not happen when employees learn that their managers and boss earn even significantly more money than they do.

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You cannot rely exclusively on benchmarks and market practices, so you will have to build grids of compensation across your company. For each type of position (“tracks”), you should have a dedicated grid. You’ll end up with grids for sales, developers, product managers, etc.