June 25, 2025 • 27 mins
Is your pay strategy quietly driving talent out the door? In this no-fluff episode, Josh Matthews sits down with compensation expert Scott Trumpolt to break down pay transparency laws, broken bonus systems, and how to finally build comp plans that retain and motivate. If you're hiring, leading, or scaling, this one’s a game-changer.
🔍 Chapters:
00:16 – Why your comp strategy might be broken
01:27 – What pay transparency laws get wrong
05:06 – The problem with static pay bands
11:35 – Building trust through variable pay transparency
19:22 – The truth about salary data (Glassdoor, Salary.com, etc.)
22:58 – Pay equity in remote vs. on-site roles
🎙 Guest: Scott Trumpolt
Founder, HRCompensationConsulting.com
LinkedIn: Scott Trumpolt
📌 Host: Josh Matthews | The Hiring Edge – Smarter Teams. No Fluff.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Scott Trumpholt (00:00):
I think this is really important.
I think you need to starttalking about that.
Pay range is like this is aliving thing, it's not static,
okay.
Josh Matthews (00:10):
I'm Josh Matthews .
This is the Hiring Edge Smarterteams, no fluff, here we go.
Struggling to attract toptalent or keep your best people
from jumping ship, compensationmight be the silent culprit.
Today's guest, scott Trumple,helps companies fix broken pay
systems.
He works with leaders who aretired of guesswork around raises
(00:33):
, unclear pay bands or losingpeople to better offers.
His focus is simple bringstructure and transparency to
compensation so it actuallysupports retention, performance
and growth.
If your team is frustrated byunfair pay or if you're unsure
how to build a system thatscales, scott's got the answers.
Scott, welcome to the show.
Scott Trumpholt (00:56):
Nice to have you.
Thank you so much, Josh, forhaving me on your program and
for giving me the opportunity toaddress your listeners and your
viewers.
Josh Matthews (01:03):
I appreciate it.
You know this is.
We've been running this showfor four years and you are the
very first compensation expertthat we've ever had on.
I feel like a fool a little bitfor not having someone with
your depth of experience andknowledge about something so
critical, like so critical, onthe show before let's go ahead
(01:25):
and just dive into it.
Scott Trumpholt (01:27):
Josh, let me just say that I've had other
podcast hosts say the same thing, and it doesn't surprise me,
because compensation itself isvery much, or has been, in a
black box, and so for the past13 years I've really been trying
to take it out of the shadowsof where it belongs, but do it
(01:48):
in a way that makes sense forthe business.
Josh Matthews (01:51):
Yeah, I'm glad to hear that 12 to 24 months or so
, a number of states have begunto pass laws that require
transparency and compensationwith the job description Either
(02:12):
if I guess.
I guess I've heard it.
Some states you must post it inthe description.
Other states say you mustreveal it if asked things like
that.
Talk for a minute about what'sdriving that.
There's got to be a real reasonhere.
Scott Trumpholt (02:29):
Yeah, what's driving it really is the younger
generations that are now partof the workforce.
That's what's driving it, but Ithink and you're right the pay
transparency laws.
There's probably about 10states that either have passed
such laws, or I know Minnesotaand Massachusetts.
(02:51):
I think those are the two thathave some coming into effect in
2025.
I'm not 100% certain.
Josh Matthews (02:57):
No, I think you're right.
I think it's in July.
Scott Trumpholt (02:59):
Yeah, so it's still not the majority of states
, but again, it's partially agenerational thing.
They're just not thinking inthe same terms.
But what concerns me is that Ithink these laws obviously laws
have to be written verycarefully and they often don't
get the full effect that maybethey want to because it's just
(03:21):
part of the way they write thelaws.
But I think they're missing themark a little bit with these
laws and actually might backfire.
And the reason I say that isbecause what a lot of these laws
say in the various states, eventhough there can be some
variation, a lot of them saywell, you have to post part of
the range, you know, the minimumto the midpoint, the
(03:43):
competitive midpoint of therange.
Or some states may say you knowthe minimum to the midpoint,
the competitive midpoint of therange.
Or some states may say you know, post the whole range.
But to me that's just a deadend.
Josh Matthews (03:52):
My experience has been that when you provide a
range, the candidates onlyremember the top number, yeah,
and the companies only rememberthe bottom number.
Everyone gets disappointed,right, and now we're in.
Then you're jumping intonegotiations, right, and you're
(04:12):
dealing with concepts of equityversus Darwinian meritocracy,
right, where you know employee Amight be making $135,000.
You know employee A might bemaking $135,000.
And it's posted for the samejob $140,000, because the
(04:35):
market's changed, or $145,000.
And people do not everybody butpeople track this stuff.
Some of this transparency.
It just feels to me kind oflike you were saying, but for
possibly a different reason.
It might create some bad blood.
Scott Trumpholt (04:46):
Yeah, and I think again, what's missing from
the equation?
I think that the dialogue thatyou have with a potential
employee or one that's alreadywithin the organization because
again, some of these paytransparency laws impact that
population as well is to slowlychange the culture and the
dialogue of how you address payissues.
(05:08):
I think this is reallyimportant.
I think talking about that payrange is like this is a living
thing.
It's not static.
Okay, this is very important.
The idea is that you may starthere, but it's dependent upon
you to a great degree, not justyour skills that you acquire,
(05:29):
but skills that fit the businessneed and understanding, because
when the employee or thecandidate starts to understand
what the needs are of thebusiness, I think they become
more connected to it.
And this is part of thisyounger generation they really
want to feel connected, thattheir work has value and they
want can make more money and Ican get a bigger job in a couple
(05:51):
of years.
But then again I see otheryoung employees that have been
(06:11):
at companies for some time andI've talked to a few of them
about this and it's like it'schanging the dynamic where you
want to grow, but let's growwhere we already are instead of
having to go somewhere else.
And if we can make thischallenge and this is where
something else happens that'svery important, if we can arm
(06:35):
managers as human resources withthe kind of tools where they
focus on the career developmentaspects.
What's the next step for thisindividual within your
department?
Or does it mean they have tomove laterally within the
organization?
And when you look at employeeengagement surveys or you look
(06:56):
at reasons for turnover,compensation is not at the top.
It's an easy one for employeesto use.
Yeah, leaving the companybecause it doesn't ruffle any
feathers.
People can understand that.
But the reality is is thatsometimes it's a lack of
employee engagement andoftentimes they're not having
that engagement directly withthe person that matters most to
(07:17):
them in the organization, whichis their direct manager.
And it's not the directmanager's fault either, because
they may not be getting the kindof tools.
They're very busy with theother parts of what they do.
They're trying to run abusiness.
Josh Matthews (07:31):
Well, look, it's not even part of their culture.
No one's doing it for them.
How would they even know?
How would they even begin toknow?
And I see this a lot withinterviewing, right, everybody
knows that everyone who is aninterviewer thinks that they're
a really good interviewer, andit's just not the case, and I'll
(07:52):
pound this drum.
I'll beat this drum probablytill the day I die.
It's just the case.
So I want to ask you a coupleof questions about this Now.
One of the challenges that I'vewitnessed is around salary
surveys.
When we talked last week, youshared a little bit about your
access to some of these reallyincredible tools that the
(08:14):
average company likely does not.
You know they're not paying forit, and even if they paid for
it, they wouldn't even be ableto analyze it accurately.
You've got 30 years in theindustry, right, so you're able
to do that and you're an expertin your field.
But for the organizations thataren't investing in consulting
from you or from someone likeyou, it begins to be a real
(08:35):
challenge.
So, with these smallercompanies, when it comes to say
how they're delivering bonuses,oftentimes it's just say how
they're delivering bonuses.
Oftentimes it's just you knowwhatever the manager or whatever
the owner feels like giving.
And for some of these big onesit's very, very structured.
But I interview a dozen people aweek and I ask them.
(08:56):
I asked someone just thismorning.
I said you know they work for abig company.
I said what was your bonusstructure like?
It's like oh, I don't know.
So what do you think it waslike?
And it turned out it was about8%, 8 to 10% of his compensation
.
It's just not clear.
People aren't talking, they'renot communicating and, frankly,
a lot of candidates, at least inthe Salesforce ecosystem, when
(09:19):
I bring up bonus because it'slike hey look, you're probably
going to get 8% or 10% or you'regoing to get 20% bonus on this,
they are so fed up, especiallythe people who've been doing it
for 10 years.
They're like Josh, I'm justgoing to tell you, base pay is
what reigns and the bonus thing.
I've been burned so many times.
What would you say to thesecompanies?
Scott Trumpholt (09:46):
you say to these companies.
Well, the problem is and youalluded to this is the fact that
these individuals, first of all, have no clear guidance, and I
have seen companies that do itwell.
So this is what I'm going torespond off of you know kind of
best practices.
You need to take the time at acompany level to explain how
this bonus is influenced by theworkers.
(10:08):
In that area there needs to bea discussion and you can't take
a one-size-fits-all approach.
I'm all for simplicity withinan incentive plan, I'm all for
clarity, but the most importantthing is to pick objectives that
different jobs can reasonablyreach and they understand at the
(10:29):
beginning of the incentiveperiod what's going on and how
this, what different impactthere can be based upon their
contribution to the organization.
So one of the things when Iwork on an incentive plan, one
of the things that I provide upfront, is a tool where each
(10:50):
employee at the beginning,before the plan even starts,
before day one, two weeks beforeor so, they get a spreadsheet
that shows okay, here are yourobjectives and here are the
weightings for those differentobjectives.
But the most important part isthat they can go in there and
they can manipulate it.
(11:10):
They can say okay, let's say Ido 80% on this one and I do 50%
on this one, and itautomatically calculates at the
beginning of the year what theirbonus is.
So they can manipulate and theycan see firsthand.
They can eyeball.
They don't know if this isgoing to transpire, but it gets
them more involved.
(11:31):
By having we talked about paytransparency, now we're into
variable pay transparency, but Ibelieve this is very important.
You know it's just anindividual bonus calculator, so
it's very important.
That kind of transparency in avariable plan, not at the end of
the quarter, and thereshouldn't be a problem because
you have to give them a plandocument and usually what
(11:52):
happens is they create a plandocument and they send it out to
employees, but there's nooverall engagement.
And as a recruiter, what Iwould love to see happen is the
recruiter is the first person.
So important in this process isthe recruiter, because they're
the first representative thatthe individual often will see.
(12:13):
And so if that recruiter isarmed with some level of detail
not getting into the weeds againtoo specific, but say hey,
we've got a team bonus component, that's part of it to encourage
that everybody isn't justcompetitive with each other.
But if the team doesn't do well, this doesn't happen.
This happens and you're goingto get this percentage.
(12:35):
But, more importantly, here'show it breaks out in terms of
the measurements and whatweightings are important for you
to understand.
Overall, everybody should betied into the overall goal, even
if they can't influence it,because you need to be able to
take the incentive.
However, I am not going to givethe same measurements and the
(12:56):
same weightings for an HRprofessional as I am a
operations professional or asales professional.
Josh Matthews (13:05):
Can I jump in?
I want to ask you about theteam thing for a second and just
dive a little bit deeper onthat.
Sure, there have been so manystudies around team incentives.
It might be you know, I've seenthese at universities around
grades.
I've seen them at organizationsaround EBITDA, which I actually
(13:26):
think is kind of a neat modelbecause it protects the company
from overextending themselves.
But when an organization iscreating team incentives, how
effective is that in creatingpeer unity or peer pressure to
complete the goals?
And what percentage of peoplemight you think you don't have
(13:49):
to be specific, but it justfeels to me like there's always
going to be one or two badactors that ride the coattails
of everyone else.
If you've got a team of 10 andtwo or three are dragging their
feet and there goes 20 or 25 or30 percent of your bonus because
the team didn't meet theobjectives, are organizations
(14:09):
that you work with?
Are they actually reallyleveraging that to understand
okay, these people need to goright, or hey, these seven
people crushed it.
Now it feels punitive to thepeople who are working so hard.
Let's face it, people are notcreated equal.
Maybe in the eyes of God, butnot in the workforce.
(14:32):
They just aren't.
Some people have a great workethic, some people don't.
Some people put the extra timein.
Some people have found greaterhappiness with life balance and
it's less important to them.
So when we're talking aboutthese kinds of dynamics and
we're trying to incentivize awhole team, something inside me
is just sort of screaming likethat feels broken.
What would you say about that?
Scott Trumpholt (14:53):
Well, the first thing I would say is I
understand and I would say thatit's all in the design.
Oftentimes, what I'll see ismanagement decides yeah, we got
to put a team component in there, and they make it laughable,
they'll put 10%.
And they make it laughable,they'll put 10%.
(15:15):
So the weighting has to beappropriate.
It has to be significant enoughthat people pay attention to it
, but, on the other hand, not somuch that you've got to draw
clear distinctions in terms ofindividual performance.
And, by the way, if there arepoor performers weighing down
that group, they need to do aperformance improvement plan and
all of these things.
Josh Matthews (15:32):
Three reprobands recorded all this stuff.
Yeah.
Scott Trumpholt (15:35):
What I'm saying is is the incentive plan, which
has an individual component.
That is an ideal part of thisprocess, where you know you've
got two or three people that arenot hitting their numbers and
their numbers are designed to besimilar to those doing the same
type of work.
So there you've got what youneed from a performance
(15:56):
standpoint.
So weeding out the poorperformer should not be as
difficult as it is, becauseyou've got hard evidence that
they were assigned the sameindividual objectives as these
other people and they did notmeasure up objectives as these
other people and they did notmeasure up.
So I think it can be used moreas a measuring stick, not just
(16:16):
to pay incentives but to alsorecognize who the lowest
performers are and what are wegoing to do with them.
It doesn't necessarily meanimmediately getting rid of them,
but maybe their talents arebest suited somewhere else.
But the bottom line is you'vegot to have balance in an
incentive plan and I thinksometimes I see a team bonus
(16:39):
component that's only worth 10%,or they put it as part of a
quarterly plan.
No, that's really more.
Measure things on an annualizedbasis.
And I agree with you EBITDA isvery good, because people,
either directly or indirectly.
If the company doesn't do theearnings, then there's no reason
for an incentive plan, but anincentive plan is put in there
to help encourage it.
So I think it's about balanceand it's not that you can't have
(17:03):
a team.
I believe you need team andindividual goals, but they need
to be weighted appropriately andthen, at the end of the process
, use it as a cleardocumentation for distinguishing
between the top performers andthe lower performers.
And, by the way, the other partthat's really important to me is
(17:26):
to really make it market-based,and I don't mean just seeing
what the best practice is outthere, but literally saying
because I've got the market data.
So if someone, if I will ask aclient, I will say what would
you consider top performance?
Oh, top performance would be140% of target performance.
(17:51):
They hit that level ofperformance.
We will pay them in total cashcompensation equivalent to the
80th percentile.
That means that only 20% aremaking more than that.
And again, it's abouttransparency, josh.
It's about transparency.
And that's the other thingabout putting it into an
individual transparent paycalculator, which I do for my
(18:14):
clients so they can share that.
Because then imagine not onlyshowing the performance but
saying to an employee, I, totheir face, say if you hit 120%
performance, you are going to bepaid at the 80th or the 85th
percentile of your market value,not the 50th percentile which
everybody hovers around, becausethat's the competitive midpoint
(18:38):
.
But you know what?
If you're only 10% higher,that's great, we're going to pay
you higher than market, butit's only going to be at the 60
or 65th percentile.
This is really importantbecause then they can see how
they can grow their pay throughtheir performance.
Josh Matthews (18:54):
Transparency.
Yeah, it makes an awful lot ofsense to me.
It makes me think a little bitaround how some clients that I
work with and it's just kind ofknown people jump on chat, gpt
or they grab whatever recruitingcompany's salary guide produced
that year right.
(19:14):
How reliable are these generalsites such as salarycom or
Glassdoor?
Some of these Well?
Scott Trumpholt (19:22):
not terribly.
They are a good starting point.
No-transcript, and oh my God,we could have a whole podcast
(19:52):
about job titles in the UK.
Josh Matthews (19:53):
Well, that's I'd love to.
We'll do that next.
Scott Trumpholt (19:56):
Okay, whether it's with me or someone else,
because that's a reallyimportant aspect.
But what I'm saying is theywill say well, I'm a director,
so I'm going to use the directorand I got it within my field.
It says finance director.
So, first of all, they may beand this is a problem also when
(20:17):
it comes to recruiting, whichyou know very well Someone might
come to me and say the payranges aren't working and I'll
start to look at the send mesome of the candidates.
The job is open is for amanager and the people
understand that it's a manager'sjob.
But all the people applying forit, for whatever reason, have
been directors at othercompanies.
They've had larger scope.
Maybe they're wanting todownsize.
(20:39):
But getting back to your marketdata question, part of the
problem also is that it's notprecise enough.
For example, the sample size,if they even have it, could be
very small, and that skews thedata one way or the other.
With my market data that Iutilize, it's calibrated so that
(21:00):
there are hundreds or thousandsin there of incumbents in that
job, which helps to level outthe market data.
The other thing is that theperson on Glassdoor might be
working at a very large companyand someone at a smaller company
will take that, oh, I've gotthe same job.
I'm a software engineeringdirector and take that as gospel
(21:22):
.
But different industries,different company sizes pay
differently, the location of theorganization as well.
So there's all these differentfactors, like a soup you're
throwing into a bowl to make thesoup and they all need to be
analyzed and so, while it's agood starting point, you have to
look below the surface a littlebit, and that's not something
(21:45):
you can easily do for freeonline.
At the very least, you're notgoing to even know what the
sample size is.
But if you do know the samplesize, then I would challenge
them to come forward and sayokay, is this in your field?
Is this in an industry that'scomparable to what you're after?
There's all these differentfactors.
Compensation is not finance.
(22:06):
It's very gray part art, partscience.
That's why it's part of humanresources.
You're dealing with people'slivelihoods and you really have
to make this kind of aconnection based on a lot of
different factors.
It doesn't all add up nice atthe end of the day.
It's partly creative, butyou've got to bring all these
(22:28):
different pieces together tomake a really good decision.
Josh Matthews (22:33):
Okay, let me ask you something about pay bans and
what some companies are doingin this world of remote work,
where they are adjusting thecompensation based on your
location.
They are adjusting thecompensation based on your
location.
So someone in San Franciscodoing the same job is going to
earn more than someone who'sdoing the same work in Kentucky,
(22:57):
right yeah, do you feel thatthat's a fair practice, a
justified practice, and what aresome of the challenges with
that?
Scott Trumpholt (23:13):
Yeah, I think it is fair.
There's a lot of confusionthere.
Out there, a lot of people usethe word cost of living and cost
of labor interchangeably andthey are two different things.
Most companies use the cost oflabor what it costs to bring in.
It's not about the cost ofliving and inflationary factors
and what the cost is of localgrocery stores.
There is a correlation in thesense that if you live in San
(23:36):
Francisco, you have a very highcost of living and the cost of
labor is higher than thenational average significantly,
but it doesn't match the cost ofliving.
Okay, it's not the same thing.
And so what?
Typically, what I do is that Imarket, I build the pay
structure based upon the UnitedStates national average and then
(23:58):
some other factors thatspecifically relate to the
company, company size, industry,things like that.
But then what we do is we breakit out into different segments
by cost of labor.
So I look at all the citieswhere the company may do
business and then assign basedon the cost of labor locally.
So it is utilized.
(24:18):
But one of the things that I doask employers and company
clients is regarding remoteemployees, where you don't have
an office, is it necessary tohave a local presence there or
is this the employee's choice?
They have the ability to workremotely, but sometimes, if it's
a salesperson, you need aperson in Decatur, georgia,
(24:41):
instead of being in another partof Georgia Atlanta, georgia or
Savannah Georgia.
You need someone.
But other times it's a remoteIT person.
So it's got to be based onbusiness need.
But again, just to clarify, itis legitimate to have these
different amounts and I'veworked with this with many, many
different clients, where I havehad one client that's in
(25:06):
Manhattan, very high cost oflabor, but they have other
offices too, and then they makea decision as to whether or not
there's a business need for thatremote employee.
Otherwise they're going to getpaid based upon the business
need.
Some companies simply say to meno, no matter where they are,
we're paying off where thecorporate office is located.
(25:27):
So the answer is it varies byclient.
But what I try and steer themtowards is, first of all, it's
not cost of living, it's cost oflabor and I want them to
understand the impact.
If you have a number ofemployees case by case basis,
and you need them in WichitaKansas, case-by-case basis, and
(25:48):
you need them in Wichita Kansas,you shouldn't need to pay the
same as you're paying in NewYork City, and they get that.
But there's again there's thesedifferent factors to be
considered.
Is there really a business needfor them to be there, or is it
just the employee's choice?
Josh Matthews (26:02):
And I think about the employee choice a lot.
I've lived in Utah and SanFrancisco.
Look, I live in Jupiter.
I've lived in San Francisco.
I've lived in a lot of fairlyexpensive places to live in,
some sort of medium averageplaces like Portland Oregon.
There's a benefit that you getif you are living in a place
that has a higher cost of livingNot always, not 100% of the
(26:23):
time, but I get the sunshine inthe beach here.
You know it's half a mile.
Cost of living Not always, not100% of the time, but I get the
sunshine and the beach here.
You know it's half a mile downthe road.
So that's a personal choicethat I made and there should be
a cost to that.
If someone, if I'm, forinstance, a remote employee for
a company, there should be somesort of cost to that.
(26:43):
It was my personal choice.
Scott, you have been an absolutejoy to have a conversation with
this evening.
Thank you so much for takingtime out of your night to spend
it here with me and with ourlisteners.
Again, this is SalesforceHiring Edge.
We've been joined by ScottTrumpholt, t-r-u-m-p R?
(27:05):
U M P O L T compensation expert.
He can be found at HRcompensation consultingcom If
you type in Scott Trump Holt inLinkedIn, you know what, you
should probably follow him.
And, by the way, if you trulyvalue your company, you want the
best of the best.
If you're the kind of companywho invests in the right kind of
(27:28):
software and invests in theright kind of employees, you may
want to consider investing inhaving one of the best
compensation structures that youcould possibly invest in, and
if that's the case, make sureyou reach out to Scott.
Thank you so much, scott.
You are welcome back anytime.
Scott Trumpholt (27:47):
It's been my pleasure to be on the program
with you today, Josh.
Thank you.
I think this is really important.
I think you need to starttalking about that.
Pay range is like this is aliving thing, it's not static,
okay.
Josh Matthews (00:10):
I'm Josh Matthews .
This is the Hiring Edge Smarterteams, no fluff, here we go.
Struggling to attract toptalent or keep your best people
from jumping ship, compensationmight be the silent culprit.
Today's guest, scott Trumple,helps companies fix broken pay
systems.
He works with leaders who aretired of guesswork around raises
(00:33):
, unclear pay bands or losingpeople to better offers.
His focus is simple bringstructure and transparency to
compensation so it actuallysupports retention, performance
and growth.
If your team is frustrated byunfair pay or if you're unsure
how to build a system thatscales, scott's got the answers.
Scott, welcome to the show.
Scott Trumpholt (00:56):
Nice to have you.
Thank you so much, Josh, forhaving me on your program and
for giving me the opportunity toaddress your listeners and your
viewers.
Josh Matthews (01:03):
I appreciate it.
You know this is.
We've been running this showfor four years and you are the
very first compensation expertthat we've ever had on.
I feel like a fool a little bitfor not having someone with
your depth of experience andknowledge about something so
critical, like so critical, onthe show before let's go ahead
(01:25):
and just dive into it.
Scott Trumpholt (01:27):
Josh, let me just say that I've had other
podcast hosts say the same thing, and it doesn't surprise me,
because compensation itself isvery much, or has been, in a
black box, and so for the past13 years I've really been trying
to take it out of the shadowsof where it belongs, but do it
(01:48):
in a way that makes sense forthe business.
Josh Matthews (01:51):
Yeah, I'm glad to hear that 12 to 24 months or so
, a number of states have begunto pass laws that require
transparency and compensationwith the job description Either
(02:12):
if I guess.
I guess I've heard it.
Some states you must post it inthe description.
Other states say you mustreveal it if asked things like
that.
Talk for a minute about what'sdriving that.
There's got to be a real reasonhere.
Scott Trumpholt (02:29):
Yeah, what's driving it really is the younger
generations that are now partof the workforce.
That's what's driving it, but Ithink and you're right the pay
transparency laws.
There's probably about 10states that either have passed
such laws, or I know Minnesotaand Massachusetts.
(02:51):
I think those are the two thathave some coming into effect in
2025.
I'm not 100% certain.
Josh Matthews (02:57):
No, I think you're right.
I think it's in July.
Scott Trumpholt (02:59):
Yeah, so it's still not the majority of states
, but again, it's partially agenerational thing.
They're just not thinking inthe same terms.
But what concerns me is that Ithink these laws obviously laws
have to be written verycarefully and they often don't
get the full effect that maybethey want to because it's just
(03:21):
part of the way they write thelaws.
But I think they're missing themark a little bit with these
laws and actually might backfire.
And the reason I say that isbecause what a lot of these laws
say in the various states, eventhough there can be some
variation, a lot of them saywell, you have to post part of
the range, you know, the minimumto the midpoint, the
(03:43):
competitive midpoint of therange.
Or some states may say you knowthe minimum to the midpoint,
the competitive midpoint of therange.
Or some states may say you know, post the whole range.
But to me that's just a deadend.
Josh Matthews (03:52):
My experience has been that when you provide a
range, the candidates onlyremember the top number, yeah,
and the companies only rememberthe bottom number.
Everyone gets disappointed,right, and now we're in.
Then you're jumping intonegotiations, right, and you're
(04:12):
dealing with concepts of equityversus Darwinian meritocracy,
right, where you know employee Amight be making $135,000.
You know employee A might bemaking $135,000.
And it's posted for the samejob $140,000, because the
(04:35):
market's changed, or $145,000.
And people do not everybody butpeople track this stuff.
Some of this transparency.
It just feels to me kind oflike you were saying, but for
possibly a different reason.
It might create some bad blood.
Scott Trumpholt (04:46):
Yeah, and I think again, what's missing from
the equation?
I think that the dialogue thatyou have with a potential
employee or one that's alreadywithin the organization because
again, some of these paytransparency laws impact that
population as well is to slowlychange the culture and the
dialogue of how you address payissues.
(05:08):
I think this is reallyimportant.
I think talking about that payrange is like this is a living
thing.
It's not static.
Okay, this is very important.
The idea is that you may starthere, but it's dependent upon
you to a great degree, not justyour skills that you acquire,
(05:29):
but skills that fit the businessneed and understanding, because
when the employee or thecandidate starts to understand
what the needs are of thebusiness, I think they become
more connected to it.
And this is part of thisyounger generation they really
want to feel connected, thattheir work has value and they
want can make more money and Ican get a bigger job in a couple
(05:51):
of years.
But then again I see otheryoung employees that have been
(06:11):
at companies for some time andI've talked to a few of them
about this and it's like it'schanging the dynamic where you
want to grow, but let's growwhere we already are instead of
having to go somewhere else.
And if we can make thischallenge and this is where
something else happens that'svery important, if we can arm
(06:35):
managers as human resources withthe kind of tools where they
focus on the career developmentaspects.
What's the next step for thisindividual within your
department?
Or does it mean they have tomove laterally within the
organization?
And when you look at employeeengagement surveys or you look
(06:56):
at reasons for turnover,compensation is not at the top.
It's an easy one for employeesto use.
Yeah, leaving the companybecause it doesn't ruffle any
feathers.
People can understand that.
But the reality is is thatsometimes it's a lack of
employee engagement andoftentimes they're not having
that engagement directly withthe person that matters most to
(07:17):
them in the organization, whichis their direct manager.
And it's not the directmanager's fault either, because
they may not be getting the kindof tools.
They're very busy with theother parts of what they do.
They're trying to run abusiness.
Josh Matthews (07:31):
Well, look, it's not even part of their culture.
No one's doing it for them.
How would they even know?
How would they even begin toknow?
And I see this a lot withinterviewing, right, everybody
knows that everyone who is aninterviewer thinks that they're
a really good interviewer, andit's just not the case, and I'll
(07:52):
pound this drum.
I'll beat this drum probablytill the day I die.
It's just the case.
So I want to ask you a coupleof questions about this Now.
One of the challenges that I'vewitnessed is around salary
surveys.
When we talked last week, youshared a little bit about your
access to some of these reallyincredible tools that the
(08:14):
average company likely does not.
You know they're not paying forit, and even if they paid for
it, they wouldn't even be ableto analyze it accurately.
You've got 30 years in theindustry, right, so you're able
to do that and you're an expertin your field.
But for the organizations thataren't investing in consulting
from you or from someone likeyou, it begins to be a real
(08:35):
challenge.
So, with these smallercompanies, when it comes to say
how they're delivering bonuses,oftentimes it's just say how
they're delivering bonuses.
Oftentimes it's just you knowwhatever the manager or whatever
the owner feels like giving.
And for some of these big onesit's very, very structured.
But I interview a dozen people aweek and I ask them.
(08:56):
I asked someone just thismorning.
I said you know they work for abig company.
I said what was your bonusstructure like?
It's like oh, I don't know.
So what do you think it waslike?
And it turned out it was about8%, 8 to 10% of his compensation
.
It's just not clear.
People aren't talking, they'renot communicating and, frankly,
a lot of candidates, at least inthe Salesforce ecosystem, when
(09:19):
I bring up bonus because it'slike hey look, you're probably
going to get 8% or 10% or you'regoing to get 20% bonus on this,
they are so fed up, especiallythe people who've been doing it
for 10 years.
They're like Josh, I'm justgoing to tell you, base pay is
what reigns and the bonus thing.
I've been burned so many times.
What would you say to thesecompanies?
Scott Trumpholt (09:46):
you say to these companies.
Well, the problem is and youalluded to this is the fact that
these individuals, first of all, have no clear guidance, and I
have seen companies that do itwell.
So this is what I'm going torespond off of you know kind of
best practices.
You need to take the time at acompany level to explain how
this bonus is influenced by theworkers.
(10:08):
In that area there needs to bea discussion and you can't take
a one-size-fits-all approach.
I'm all for simplicity withinan incentive plan, I'm all for
clarity, but the most importantthing is to pick objectives that
different jobs can reasonablyreach and they understand at the
(10:29):
beginning of the incentiveperiod what's going on and how
this, what different impactthere can be based upon their
contribution to the organization.
So one of the things when Iwork on an incentive plan, one
of the things that I provide upfront, is a tool where each
(10:50):
employee at the beginning,before the plan even starts,
before day one, two weeks beforeor so, they get a spreadsheet
that shows okay, here are yourobjectives and here are the
weightings for those differentobjectives.
But the most important part isthat they can go in there and
they can manipulate it.
(11:10):
They can say okay, let's say Ido 80% on this one and I do 50%
on this one, and itautomatically calculates at the
beginning of the year what theirbonus is.
So they can manipulate and theycan see firsthand.
They can eyeball.
They don't know if this isgoing to transpire, but it gets
them more involved.
(11:31):
By having we talked about paytransparency, now we're into
variable pay transparency, but Ibelieve this is very important.
You know it's just anindividual bonus calculator, so
it's very important.
That kind of transparency in avariable plan, not at the end of
the quarter, and thereshouldn't be a problem because
you have to give them a plandocument and usually what
(11:52):
happens is they create a plandocument and they send it out to
employees, but there's nooverall engagement.
And as a recruiter, what Iwould love to see happen is the
recruiter is the first person.
So important in this process isthe recruiter, because they're
the first representative thatthe individual often will see.
(12:13):
And so if that recruiter isarmed with some level of detail
not getting into the weeds againtoo specific, but say hey,
we've got a team bonus component, that's part of it to encourage
that everybody isn't justcompetitive with each other.
But if the team doesn't do well, this doesn't happen.
This happens and you're goingto get this percentage.
(12:35):
But, more importantly, here'show it breaks out in terms of
the measurements and whatweightings are important for you
to understand.
Overall, everybody should betied into the overall goal, even
if they can't influence it,because you need to be able to
take the incentive.
However, I am not going to givethe same measurements and the
(12:56):
same weightings for an HRprofessional as I am a
operations professional or asales professional.
Josh Matthews (13:05):
Can I jump in?
I want to ask you about theteam thing for a second and just
dive a little bit deeper onthat.
Sure, there have been so manystudies around team incentives.
It might be you know, I've seenthese at universities around
grades.
I've seen them at organizationsaround EBITDA, which I actually
(13:26):
think is kind of a neat modelbecause it protects the company
from overextending themselves.
But when an organization iscreating team incentives, how
effective is that in creatingpeer unity or peer pressure to
complete the goals?
And what percentage of peoplemight you think you don't have
(13:49):
to be specific, but it justfeels to me like there's always
going to be one or two badactors that ride the coattails
of everyone else.
If you've got a team of 10 andtwo or three are dragging their
feet and there goes 20 or 25 or30 percent of your bonus because
the team didn't meet theobjectives, are organizations
(14:09):
that you work with?
Are they actually reallyleveraging that to understand
okay, these people need to goright, or hey, these seven
people crushed it.
Now it feels punitive to thepeople who are working so hard.
Let's face it, people are notcreated equal.
Maybe in the eyes of God, butnot in the workforce.
(14:32):
They just aren't.
Some people have a great workethic, some people don't.
Some people put the extra timein.
Some people have found greaterhappiness with life balance and
it's less important to them.
So when we're talking aboutthese kinds of dynamics and
we're trying to incentivize awhole team, something inside me
is just sort of screaming likethat feels broken.
What would you say about that?
Scott Trumpholt (14:53):
Well, the first thing I would say is I
understand and I would say thatit's all in the design.
Oftentimes, what I'll see ismanagement decides yeah, we got
to put a team component in there, and they make it laughable,
they'll put 10%.
And they make it laughable,they'll put 10%.
(15:15):
So the weighting has to beappropriate.
It has to be significant enoughthat people pay attention to it
, but, on the other hand, not somuch that you've got to draw
clear distinctions in terms ofindividual performance.
And, by the way, if there arepoor performers weighing down
that group, they need to do aperformance improvement plan and
all of these things.
Josh Matthews (15:32):
Three reprobands recorded all this stuff.
Yeah.
Scott Trumpholt (15:35):
What I'm saying is is the incentive plan, which
has an individual component.
That is an ideal part of thisprocess, where you know you've
got two or three people that arenot hitting their numbers and
their numbers are designed to besimilar to those doing the same
type of work.
So there you've got what youneed from a performance
(15:56):
standpoint.
So weeding out the poorperformer should not be as
difficult as it is, becauseyou've got hard evidence that
they were assigned the sameindividual objectives as these
other people and they did notmeasure up objectives as these
other people and they did notmeasure up.
So I think it can be used moreas a measuring stick, not just
(16:16):
to pay incentives but to alsorecognize who the lowest
performers are and what are wegoing to do with them.
It doesn't necessarily meanimmediately getting rid of them,
but maybe their talents arebest suited somewhere else.
But the bottom line is you'vegot to have balance in an
incentive plan and I thinksometimes I see a team bonus
(16:39):
component that's only worth 10%,or they put it as part of a
quarterly plan.
No, that's really more.
Measure things on an annualizedbasis.
And I agree with you EBITDA isvery good, because people,
either directly or indirectly.
If the company doesn't do theearnings, then there's no reason
for an incentive plan, but anincentive plan is put in there
to help encourage it.
So I think it's about balanceand it's not that you can't have
(17:03):
a team.
I believe you need team andindividual goals, but they need
to be weighted appropriately andthen, at the end of the process
, use it as a cleardocumentation for distinguishing
between the top performers andthe lower performers.
And, by the way, the other partthat's really important to me is
(17:26):
to really make it market-based,and I don't mean just seeing
what the best practice is outthere, but literally saying
because I've got the market data.
So if someone, if I will ask aclient, I will say what would
you consider top performance?
Oh, top performance would be140% of target performance.
(17:51):
They hit that level ofperformance.
We will pay them in total cashcompensation equivalent to the
80th percentile.
That means that only 20% aremaking more than that.
And again, it's abouttransparency, josh.
It's about transparency.
And that's the other thingabout putting it into an
individual transparent paycalculator, which I do for my
(18:14):
clients so they can share that.
Because then imagine not onlyshowing the performance but
saying to an employee, I, totheir face, say if you hit 120%
performance, you are going to bepaid at the 80th or the 85th
percentile of your market value,not the 50th percentile which
everybody hovers around, becausethat's the competitive midpoint
(18:38):
.
But you know what?
If you're only 10% higher,that's great, we're going to pay
you higher than market, butit's only going to be at the 60
or 65th percentile.
This is really importantbecause then they can see how
they can grow their pay throughtheir performance.
Josh Matthews (18:54):
Transparency.
Yeah, it makes an awful lot ofsense to me.
It makes me think a little bitaround how some clients that I
work with and it's just kind ofknown people jump on chat, gpt
or they grab whatever recruitingcompany's salary guide produced
that year right.
(19:14):
How reliable are these generalsites such as salarycom or
Glassdoor?
Some of these Well?
Scott Trumpholt (19:22):
not terribly.
They are a good starting point.
No-transcript, and oh my God,we could have a whole podcast
(19:52):
about job titles in the UK.
Josh Matthews (19:53):
Well, that's I'd love to.
We'll do that next.
Scott Trumpholt (19:56):
Okay, whether it's with me or someone else,
because that's a reallyimportant aspect.
But what I'm saying is theywill say well, I'm a director,
so I'm going to use the directorand I got it within my field.
It says finance director.
So, first of all, they may beand this is a problem also when
(20:17):
it comes to recruiting, whichyou know very well Someone might
come to me and say the payranges aren't working and I'll
start to look at the send mesome of the candidates.
The job is open is for amanager and the people
understand that it's a manager'sjob.
But all the people applying forit, for whatever reason, have
been directors at othercompanies.
They've had larger scope.
Maybe they're wanting todownsize.
(20:39):
But getting back to your marketdata question, part of the
problem also is that it's notprecise enough.
For example, the sample size,if they even have it, could be
very small, and that skews thedata one way or the other.
With my market data that Iutilize, it's calibrated so that
(21:00):
there are hundreds or thousandsin there of incumbents in that
job, which helps to level outthe market data.
The other thing is that theperson on Glassdoor might be
working at a very large companyand someone at a smaller company
will take that, oh, I've gotthe same job.
I'm a software engineeringdirector and take that as gospel
(21:22):
.
But different industries,different company sizes pay
differently, the location of theorganization as well.
So there's all these differentfactors, like a soup you're
throwing into a bowl to make thesoup and they all need to be
analyzed and so, while it's agood starting point, you have to
look below the surface a littlebit, and that's not something
(21:45):
you can easily do for freeonline.
At the very least, you're notgoing to even know what the
sample size is.
But if you do know the samplesize, then I would challenge
them to come forward and sayokay, is this in your field?
Is this in an industry that'scomparable to what you're after?
There's all these differentfactors.
Compensation is not finance.
(22:06):
It's very gray part art, partscience.
That's why it's part of humanresources.
You're dealing with people'slivelihoods and you really have
to make this kind of aconnection based on a lot of
different factors.
It doesn't all add up nice atthe end of the day.
It's partly creative, butyou've got to bring all these
(22:28):
different pieces together tomake a really good decision.
Josh Matthews (22:33):
Okay, let me ask you something about pay bans and
what some companies are doingin this world of remote work,
where they are adjusting thecompensation based on your
location.
They are adjusting thecompensation based on your
location.
So someone in San Franciscodoing the same job is going to
earn more than someone who'sdoing the same work in Kentucky,
(22:57):
right yeah, do you feel thatthat's a fair practice, a
justified practice, and what aresome of the challenges with
that?
Scott Trumpholt (23:13):
Yeah, I think it is fair.
There's a lot of confusionthere.
Out there, a lot of people usethe word cost of living and cost
of labor interchangeably andthey are two different things.
Most companies use the cost oflabor what it costs to bring in.
It's not about the cost ofliving and inflationary factors
and what the cost is of localgrocery stores.
There is a correlation in thesense that if you live in San
(23:36):
Francisco, you have a very highcost of living and the cost of
labor is higher than thenational average significantly,
but it doesn't match the cost ofliving.
Okay, it's not the same thing.
And so what?
Typically, what I do is that Imarket, I build the pay
structure based upon the UnitedStates national average and then
(23:58):
some other factors thatspecifically relate to the
company, company size, industry,things like that.
But then what we do is we breakit out into different segments
by cost of labor.
So I look at all the citieswhere the company may do
business and then assign basedon the cost of labor locally.
So it is utilized.
(24:18):
But one of the things that I doask employers and company
clients is regarding remoteemployees, where you don't have
an office, is it necessary tohave a local presence there or
is this the employee's choice?
They have the ability to workremotely, but sometimes, if it's
a salesperson, you need aperson in Decatur, georgia,
(24:41):
instead of being in another partof Georgia Atlanta, georgia or
Savannah Georgia.
You need someone.
But other times it's a remoteIT person.
So it's got to be based onbusiness need.
But again, just to clarify, itis legitimate to have these
different amounts and I'veworked with this with many, many
different clients, where I havehad one client that's in
(25:06):
Manhattan, very high cost oflabor, but they have other
offices too, and then they makea decision as to whether or not
there's a business need for thatremote employee.
Otherwise they're going to getpaid based upon the business
need.
Some companies simply say to meno, no matter where they are,
we're paying off where thecorporate office is located.
(25:27):
So the answer is it varies byclient.
But what I try and steer themtowards is, first of all, it's
not cost of living, it's cost oflabor and I want them to
understand the impact.
If you have a number ofemployees case by case basis,
and you need them in WichitaKansas, case-by-case basis, and
(25:48):
you need them in Wichita Kansas,you shouldn't need to pay the
same as you're paying in NewYork City, and they get that.
But there's again there's thesedifferent factors to be
considered.
Is there really a business needfor them to be there, or is it
just the employee's choice?
Josh Matthews (26:02):
And I think about the employee choice a lot.
I've lived in Utah and SanFrancisco.
Look, I live in Jupiter.
I've lived in San Francisco.
I've lived in a lot of fairlyexpensive places to live in,
some sort of medium averageplaces like Portland Oregon.
There's a benefit that you getif you are living in a place
that has a higher cost of livingNot always, not 100% of the
(26:23):
time, but I get the sunshine inthe beach here.
You know it's half a mile.
Cost of living Not always, not100% of the time, but I get the
sunshine and the beach here.
You know it's half a mile downthe road.
So that's a personal choicethat I made and there should be
a cost to that.
If someone, if I'm, forinstance, a remote employee for
a company, there should be somesort of cost to that.
(26:43):
It was my personal choice.
Scott, you have been an absolutejoy to have a conversation with
this evening.
Thank you so much for takingtime out of your night to spend
it here with me and with ourlisteners.
Again, this is SalesforceHiring Edge.
We've been joined by ScottTrumpholt, t-r-u-m-p R?
(27:05):
U M P O L T compensation expert.
He can be found at HRcompensation consultingcom If
you type in Scott Trump Holt inLinkedIn, you know what, you
should probably follow him.
And, by the way, if you trulyvalue your company, you want the
best of the best.
If you're the kind of companywho invests in the right kind of
(27:28):
software and invests in theright kind of employees, you may
want to consider investing inhaving one of the best
compensation structures that youcould possibly invest in, and
if that's the case, make sureyou reach out to Scott.
Thank you so much, scott.
You are welcome back anytime.
Scott Trumpholt (27:47):
It's been my pleasure to be on the program
with you today, Josh.
Thank you.
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