Building the Right Compensation Program
with Lexi Clarke, CPO, Payscale
Compensation comes in all shapes and sizes, but no matter what your program looks like, it is fundamental to your relationship with your employees. This is why businesses are learning how to make their comp programs even more competitive in order to retain their best performers.
“Compensation and transparency are a journey, not a destination. You constantly have to be thinking about and revisiting the different ways in which you’re not transparent or the things that, as an HR professional, you might think, ‘Well, everybody just kind of logically knows that, right?’ And the truth is, that’s often not the case,” says Lexi Clarke, Chief People Officer at Payscale.
In this episode, Lexi sheds light on what makes for an effective compensation program. Along the way, she shares how her company transitioned to being fully remote and how they’ve handled their comp program with a global workforce.
In this episode, you'll gain insights into:
- Practicing transparency is your form of currency with your employees
- Regularly looking at current comp market data is crucial for providing competitive packages
- Going remote allows you to re-invest money into developing company culture across several different locations
Tune in on your go-to podcast app to understand how to elevate your company’s compensation programs to retain top talent.
[04:49] Approaching compensation today
[06:46] What is good transparency?
[09:45] Handling conflicting compensation data
[13:18] Building a sustainable comp strategy
[17:00] Staying updated on comp market data
[24:36] Local-based vs. global-based compensation
[25:55] LEARN Rapid-fire round
Lexi: One of the things I always say about transparency is Compensation and transparency are a journey, not a destination, which means that you constantly have to be thinking about and revisiting the different ways in which you are not transparent or the things that as an HR professional, you might think, well, everybody just kind of logically knows that.
And the truth is. That's not true. There's so many folks that they're just learning about compensation for the first time. I think it depends on where the company is within that spectrum. But I think that transparency can be a form of currency with your employees within your organization.
Ted: Hi, I'm Ted Blosser, CEO and co-founder of WorkRamp, where we're redefining the corporate learning space with the world's first all-in-one learning cloud for employee and customer learning. Welcome to the LEARN Podcast, where we learn from the biggest leaders in SaaS and hear what makes them successful.
Hope you enjoy the show.
Everyone welcome back to the LEARN podcast. We have a great guest here with us today. Lexi Clarke, chief people officer at Payscale. Thanks for coming on Lexi.
Lexi: Thank you so much for having me. I'm excited to jump in today.
Ted: Well, let's get kicked off with some background on yourself. Give us your elevator pitch on who you are and what you do.
Lexi: So Lexi Clarke, Chief People Officer at Payscale. I joined Payscale all the way back in August of 2020. So I did the remote onboarding and prior to my time at Payscale, I was a customer of Payscale.
So, joining because I was excited and passionate around, the products and services that Payscale offers, from uh, product perspective. Thank you. But before that, most of my background was spent early to mid-stage startup companies in the Seattle area, spent a little bit of time on the East Coast as well.
But really, my passion has been around building and getting in at a time where I can build and scale people teams that people function lots of 1st and lots of 1st processes. but ultimately joined Payscale. They were around that same journey. So the company had been around for a while. We were about 300 employees in 2020.
And now we are pushing 750 close to 800
Lexi: And we are wildly distributed throughout the US. We're in the UK. We're in Canada. we've got an offshore, office in the Philippines as well. so lots of growth, lots of fun, scaling, rocking and rolling times in the last few years. but my role every single day, I focus on our people and all things related to our people and our strategy.
I have the benefit also of doing HR at an HR company, which brings me into lots of product conversation strategy conversations that I may not, be a part of in that same way within other companies or other industries,
Ted: Tell us a little bit more about Payscale itself, just to set the context for our conversation today.
Lexi: Payscale in and of itself We've got 10 000 customers. we work with more than half of the fortune 500 and I would think about us as a full life cycle resource to all things compensation And so we're most known for our benchmarking products. That means matching every single job.
I think we match Somewhere around the 27 million jobs annually,across, 198 countries. we've got data offerings that are embedded in our products. that is everything you would think about in terms of compensation data.
We also, offer resourcing around pay equity, dynamic offer letters, all of those pieces of a comp life cycle that. Okay. You would need if you are working through or transforming or doing work around how you do compensation or total rewards at your organization. And so love everything we do.
Obviously, I'm an avid user of our own products, also a user of work ramp, at a full company scale. so have been always really excited around, the mission of what Payscale does. Obviously I mentioned I was a customer, and was enthralled and learned so much, HR career around what it meant to benchmark a job.
And how do you decide what to pay somebody under duress and in like, high-scaling circumstances? And was then obviously excited to join the Payscale journey internally.
Ted: Well, thanks for that background. And when you think about compensation, I didn't really learn this until later on in work ramps, evolution is how important it is to get right in those early stages. It's like finger in the wind. Let's just guess on that compensation, but it's probably the number one.
Contract you have between employee and an employer. And so you've got to make sure you get that right. So for today's conversation, I want to Three big things. I was doing my research on yourself. One is let's talk about compensation.
You're obviously the expert there, too. You've been talking a lot about being a remote-first company now, through and through someone's here, how that's going. And if we have time, let's jump into learning and development for our audience. But let's start with.
Compensation. And so you guys have a very unique viewpoint. Give us your view on compensation in this market, especially when you have big companies like the Microsoft of the world, not giving out compensation as freely anymore.
How are you suggesting people approach compensation and let's call it more of a tight market, these days?
Lexi: it's been quite a couple of years, right? In terms of compensation. I mean, we went through, whatever you want to call it in 2021 great resignation reconsideration, you know, and then the white-hot, I think, labor market, followed, Just these massive, massive cash offers. And now we're in a place where things have started to cool down over the last couple of months in the last year or so.
I think through and through if we've learned anything since the beginning of 2020 and even before that. Yeah. I think transparency is a really key pillar to any compensation strategy. I think a core foundation in data, is 1 of the most important and kind of critical things that you can do as it relates to your compensation process and structure.
Just having a really sustainable approach, If I dig into that 1st pillar around transparency, I think so much transparency is all over the headlines,
And employers kind of say, what do I do? Some companies were really transparent. Maybe if they were in the tech industry or tech space, some companies have not been transparent that transparency. I think to me, isn't just what we see in the headlines around the legislation. Transparency is absolutely, you've got compliance, or you've got a requirement to share some of that range information, you should be doing that. But I think transparency starts with transparency into decisions and process around compensation.
You talked a little bit around, like, how important you're learning, right? That compensation is from the very beginning. And I think that's so true. I think about that 1st offer is the 1st time you have to build. Or, break trust with a future employee, that life cycle then just continues through however long that they are with the organization, hopefully for a long time.
And so I think finding those different moments of transparency is really important.
[00:06:14] Ted: Can I ask you about transparency before we go on to some other topics? This is actually really great point. don't know if you saw on the news recently with Google's, levels being leaked, externally to the public. And so people could see literally what every engineer was getting paid.
You have a best practice that you would give to HR leaders on how transparent is good transparency without let's say, having the pitchforks come out.
Lexi: it's a great question, and I think different organizations are in different places of the journey. Payscale publishes something called a transparency spectrum, where you can see the full different points where someone is an organization tends to be super, super transparent about everything, or highly conservative in their transparency.
If I think about that sweet spot, One of the things I always say about transparency, is Compensation and transparency are a journey, not a destination, which means that you constantly have to be thinking about and revisiting the different ways in which you are not transparent or the things that as an HR professional, you might think, well, everybody just kind of logically knows that.
And the truth is. That's not true, There's so many folks that they're just learning about compensation for the first time. I think to more directly answer your question, I think it depends on where the company is within that spectrum. But I think that transparency can be a form of currency with your employees within your organization.
I think that you are winning points, even when. The message is maybe transparently, not what they want to hear or not necessarily in their favor, depending on what the question is that transparency goes a long way into building a lot of trust with your employees and with the organization to say, listen, I know that even if it's not something I agree with, they were honest and they told me the truth about how this process functions and I think no matter how large or small your organization is, that is so critical.
That relationship I think is really key. And so for us internally at Payscale, We have ranges on all of our job postings, regardless of location. Every employee gets a full comp statement that shows them where they are within their range and what they can expect in terms of growth within that range as folks are promoted throughout the organization.
They can see what that next level is. We're working on an infrastructure internally where there's. More transparency around different job families to think about someone in a sales role that wants to know if I go and learn how to code, what would it look like to be an engineer? and what would that wage growth look like for me?
We're still a work in progress on some of that. Some of that is just making sure we've got good administrative setup that supports an employee looking at any time. But I think for us. Being more transparent along the way, even when it's answers around things like this market, Inflation, no inflation, I think, being more transparent around things like FAQs for employees, trainings, open office hours has really benefited us,
Ted: I love that statement of it's a journey, not a destination. And it changes. Like even at work ramp, ours has changed over time. Like when we brought in a real HR leader, we had real standards and we're probably a little bit closer to Payscale, maybe not as transparent, but close.
I've always stumbled upon this problem. like trying to be transparent, but they just don't agree with the data you're giving them? I'm curious if you have any recommendations there.
I think the most important thing for us, we've been really transparent around our data sources and what we are using to make those decisions. and that means that we give a list of how many data sources we're using.
Lexi: We share the market percentile. We share the location that we benchmark and we obviously go very transparent. Some of that is because of what we do. And we really believe in that journey for our employees. But some of that also is that I want an employee to know that if they're pulling up a different data source, and it's not in the list of data sources that we're using.
That's probably the 1st place that there's a point of friction or disconnect that we should talk through 1st. Okay. Your data source is a little different. Let's talk about that. And what that could really mean. It could mean that they're looking at different market percentiles. It could mean so many different things.
So I think. Really taking the time to understand where that person is coming from and doing that side-by-side comparison. first I think can be really helpful. I think being really open. This is where I think the people industry. HR industry is trending in general.
Be really open to being wrong sometimes. Or. Knowing that there might be a data source you just don't know about yet. And there's power in sometimes going, I've never seen that before, or I've never seen that other job posting. Let me go look at that data source.
Let me understand a little bit more deeply why we don't use it, or why we don't consider it, or why it might be different. And I'll come back to you. And there's something I think really powerful in that conversation with employees. As long as you circle back, as long as they know you're doing your diligence and research, And so I think really embracing that transparent dialogue and being really open that. There's not always one source of truth on these types of things. You get directional accuracy. Love that. I think your key suggestion is don't shut off those conversations. Like my data source is the enterprise data source. This is it. Hey, let's acknowledge, evaluate, and then have the conversation at the end of the conversation is a negotiation. They can choose to work there or with you.
Ted: But having that open conversation is much better than a one-way conversation.
Hi everyone I want to take a quick commercial break. We're talking to Lexi Clarke, CPO at PayScale, also a WorkRamp customer. We're talking all things compensation, but we also talk about skill development and up-leveling your employees. If you're looking at doing the same with your team, you've got to check out WorkRamp.
WorkRamp is the all-in-one learning cloud platform for all of your employee learning needs and also your customer learning needs. So if you want to learn more, visit us at workramp.com and check out a demo. Back to the episode.
I want to go on to the next topic around remote first, but anything else That is big on compensation that you want to talk about before we move on
Lexi: The one other thing that I will just add on, one of the pillars that I was talking about was just sustainability, which I think got to your question of how do you manage that in a really hot. Or kind of cooling market for us, I think, internally, and just any organization. I think you want to ask yourself those questions in the formation of your comp strategy.
I also think you should never set a comp strategy and say, okay, good to go. We're done. That is a great plan. If you are in an annual operating motion right now, like, many of the rest of us are gearing up to do, and preparation for 2024, it's a really powerful time to go. What is not been working this year?
Where have we really struggled with competition, retaining talent, heard a lot of noise through our engagement survey, don't think we're doing well from a metrics perspective. That sustainability, I think, and that data can give you that next point of conversation that you want to have around is our comp, strategy or philosophy really working for us.
So that would probably be the only thing that
Ted: Is there a trend on sustainability you're seeing? So for example, let's say in the zero interest rate policy era, everyone's like blanket, 12 percent across the board, like we could afford it. Are you seeing people move to department by department sustainability, repetitive, sustainability?
Like where have you seen the trends move now that we're not in the Zerp and you actually have to watch where your cash is from a sustainability perspective?
Lexi: I would encourage anyone listening. If you are an HR professional, it is helpful to go read in preparation for conversations. You're a CFO., so that is really helpful and that trend is still somewhere on the high 3's low force percent every single year.
But that percentage is. Made up of everything, right? Is that promotions market adjustments? Is it merit And so I think as we think about sustainability practices, I think through and through what we have been seeing people do is really anchor into how often they're looking at market data.
If you are in a tech company, likely, it is normal for your rewards team or for you as an HR person to talk about. Yeah, I go and look at my market data at least once a year, sometimes twice a year, depending on if you are in a. Heavy tech, maybe engineering where you're with some of the big tech companies to try and retain talent in a lot of other industries.
That's not maybe the norm. Maybe they haven't gone and revisited their market data in a year, 2 years, 3 years. And so what that means is that the data they're using to make comp decisions. Is outdated from the data that their employees are using to go and make those decisions around an offer or staying with the organization or making those big choices.
And so through and through what we have seen is real frequent conversations around. How often am I reviewing market data? What percentiles am I targeting? We should be doing that anyway. Right? It's a great touchstone. I think on, at least an annual basis, if not more often, but I think the drive for all companies, regardless of industry and regardless of employee makeup to really get in touch with that market data, I think is really, really big.
And then you should utilize some of the things like our salary budget survey, or some of those other pieces to think about. How you're thinking about retaining talent for the next year or compensation increases for the next year. And then to your point, usually in a SAS company, 1 of the biggest investments that you make is people.
I think making sure that there is a performance lens on that compensation. I think this idea of pay for performance. It hasn't gone away per se, but it shifted a lot on what performance is really made up of, over the last few years. If you are a chief people officer, it's important for you to also be really in touch with your business and understand what comp recommendations you're making, whether or not that's based off of market data also is layered in with driving the business objectives forward and performance.
Ted: Are you saying if you want to drive a more sustainable compensation strategy, you actually wanna look at market data more often? Whereas I actually would think the more logical approach would be, I don't want to see the data cause I don't want to do increases.
I want to maybe poke my head above the sand once a year. So I don't have to move anything or I could claim ignorance. Are you saying it's almost the opposite that you'd recommend?
Lexi: I am, and for me, I think in the way that that has benefited us is that We have all these trends now market data year over year for the last few years, For us internally, we look at the movement in some of these roles. What does that look like for us? And what that gives me is a data driven perspective to say, I've seen the market move really high up.
I've seen it cool down a little bit. But through and through this seems to be either slightly leading the market, or I know that where we are paying from a percentile or location standpoint is in the realm where we are going to retain the right talent. Based off of our talent makeup where we've got people in the country.
So, by looking more often. It helps me be a more proactive partner with the exec team. It helps my team, I think, be more proactive around what that sustainable approach could look like with more data and it helps those employee conversations. We talked a little bit about. And, how are you going to counter those arguments around?
Hey, this company says they'll pay me X dollar amount, but you guys aren't. And where's the disconnect there? really engage in those conversations in the right way to say, listen, I've got up-to-date market data from the last X months. And I know. That these roles are pricing, higher pricing, lower pricing about the same.
It also helps us get in front of some of those landmines as it relates to losing pockets of talent making sure that we've got good retention strategy in place for those roles that we know are hot skills. And that's helped us from just a proactive standpoint.
We basically build it into. Our metrics on kind of an ongoing basis, whether that's quarterly, annually, biannually kind.
Ted: It's like a lot of times you think it's always up into the right. And so you want to make sure you have a good pulse on that. But there are also roles where it's like, market comps are actually coming down, but it gives you better peace of mind when you're heading into those negotiations, like, Hey, the market comp, we're actually at a good spot so we can have a very, straightforward conversation on those promotions.
Ted: Okay. Let's go to the second topic. I'm going to change this up a little bit. The third topic I'll put into our lightning round, which is L&D, but the second topic now we're on this compensation discussion. I left to take a compensation-bent to the conversation was.
Remote first, you all are all in on remote first, talk to us about how that's going and maybe with the slant of compensation as well, too. Do you have any strong philosophies on remote first companies? The obvious question there's going to be paid by locality. what are your thoughts on that? So give us, your remote first, philosophies.
I'm ready for this and I'm excited because it's something that I think we've been talking about a lot. So. We made the decision as an organization in the fall of 2022 to become a remote-first organization and announce ourselves internally as such. Historically, we are right now made up of a lot of different legacy companies that we've brought together since the beginning all of those had different office environments. I would say all of those had offices. It's worth noting that point. 'cause I think that gives you the landscape of how we made the decision. And what we had noticed as we got deeper into, early, 2022, is that folks were just not coming into the office.
And we had some tried and true folks that loved to come into an office, love a routine and some of those things, but we just weren't. Returning and we weren't forcing people to come back because the thing that was that we were kind of realizing this was working and we started to play around a little bit in 2022 with getting teams together a little bit more getting cross-functional teams together, the exact team started to gather a little bit more frequently.
Lexi: And finally, I think it was, somewhere within, I think, the 3rd quarter of 2022, our CEO looked at us kind of around, an exec table and was like, I just don't think we're going back. And all of us kind of nodded and we were like, we just don't think we're going back. We were like, okay, but wait a minute.
What does that mean? And what would we be giving up? Like, sacrifices, pros and cons, all of those good things. And ultimately, we realized that there was a huge opportunity to take the money that we were spending in real estate and reinvest that into T and E and our employees and understand exactly.
What this remote first thing could really be about. We also knew from some of our research that we do that that flexibility was becoming a differentiator in the market for talent. And that as some of these companies started to go back and make decisions to go back, less and less that you're seeing a lot of roles posted as remote or work from anywhere anything like that.
And so we made that announcement in the fall. And then started to figure out, okay, now, what does that mean? We had to pivot all of our people practices and kind of all of those pieces. But for us, we took that real estate money. We reinvested it immediately into all of our employees get unlimited.
We work in regis passes, so they can basically go into any coworking space. Any day they want, use any credits and it's on us. And that was intended to make sure that we could support the situations where somebody just wants to get out of their house because their coworker, their pet is driving them nuts.
We actually are seeing a good amount of utilization. I wouldn't necessarily call it high, but there's definitely spikes in certain locations. And that's one of the things that we're starting to monitor a little bit. But we also are finding that those spaces are flexible enough for big team gatherings.
And so over the last, I would say, probably 3 to 5 months, we've been really experimenting with that. And so, in the end of Q1, we rolled out employee and manager guidebooks. Like, kind of strategy and guide to what it meant to be remote first, what to expect from us in a remote-first environment and for managers, How the heck do I manage a team in a remote environment?
How do I bring people together? What do I need to do? How do I get budget approval? Kind of some of those tactical pieces. And then we started to build metrics around it. So we just finished our engagement survey. We built a whole remote work and enablement section. Do you feel well set up? We rolled out a stipend that folks could use for anything from, hey, I need a printer to hey, I really love a walking pad under my desk because I'd really like to walk during my meetings during the day.
And we give that. Out to employees on an annual basis and say, use it in whatever way makes sense. And so we started to really go through a lot of those adventures together asking for feedback along the way. We're in the midst of thinking about a city ambassador program of sorts where we have a high.
The population of folks in certain areas, and we're going to give them the power and the budget to get their teams together without a lot of support or oversight. If you will, from the people team. So, for us, it has really been about heavily investing in how do we make this work? Because we know that we were successful during those years when we had to be remote and none of these companies were.
I would say remote 1st, they definitely were flexible before, but big, big in office cultures. How are we enabling kind of teams to travel? What's too much travel? What's just enough travel? What does that really look like? Now, the next lens is making sure that everybody feels like they can perform up to the standards that they want to perform at.
As we think about managers, having review conversations and goal conversations and connection and community. And so I would say, so far, it's going pretty well for us. We've definitely got some, kinks and programmatic stuff to continue to iron out, but our employees have been a big voice of feedback.
And we've tried to create a lot of channels to hear that, because how they're feeling is important too.
Ted: In the final question, I'll ask you on this topic and we'll move into our lightning round is compensation. Are you a believer of local-based compensation or global? With this change. We moved away from, pay based off of individual location and city location to a nationally based range for, wherever folks are. But you'll vary by country.
Okay. Is that your recommendation typically is you're remote first.
Lexi: Some interesting things if we look at the US we did a full analysis on high-cost versus the nationally base range with the thought, knowing we do have people in what would traditionally be thought of as high-cost areas. We actually saw over the last year or so that some of that.
High-cost data started to come down. Some of the national ranges started to come up. I think that's reflective of a lot of being remote. for us, that was a really good move. I also think that there's a lot of power in being able to know that you've got folks in different locations and they're, paid based off of that same scale.
And that has really. Worked well for us, even down to the zip code. Sometimes I know that those are still things that a lot of organizations are using. It might make sense for where they are right now. It didn't make sense for us. And I think we'll start to see a lot more companies move in this direction. Great recommendation. All right. Our final section is usually called the learn lightning round. Third topic into lightning round, just making up some lightning questions on the fly. So hopefully they're not too hard. So we're going to do some L&D-related lightning round questions.
Ted: So question for you. What's your favorite program you either have now or have built. And when I mean program, something like leadership development, give us what's your favorite program.
Lexi: We do an annual people leader summit. We're on our 2nd round this year. That summit is a couple of days dedicated to all things being a people manager that's emerging leaders all the way up to our executive team. That investment has been an investment the last 2 years, but it is so worth it.
I think to see all of your people managers in one place. Learning from one another acting in cohorts, discussing different topics, troubleshooting and getting a little bit of a chance to celebrate what good leadership looks like by playing games and giving some awards and some of those things too.
I saw our CFO, I would say was our executive sponsor last year. He's a big, believer in all things impact of people to, the strategy and execution of the organization. and then I have kind of become sponsor.
Ted: That's awesome.
All right. Next question. Looking forward. What's an area you're, excited to invest in, or you want to invest more in from an L&D perspective?
Lexi: I could always invest more in leadership development. I think there's so many facets and it's so important, I would say the beginning kind of stages of our journey this year. I think more skills-based training for our employees that are thinking about either bettering themselves within their role.
We're thinking about cross-functional movement. How do I become good at X? So I can move to X role and promote continued internal mobility. That's the next one that I've got kind of my eyes on.
Ted: are you leaning more inwards there for let's call it those materials or training programs, or are you a one who has a philosophy that's leaning a little more externally, things like, programs your employees can upskill on externally.
Lexi: if I had my magic wand, I would love to do both. And the balance I would say is that I think there's power in making sure you've got things that resonate for employees internally, that they can wrap their heads around that have similar language. But I also think that there's so much power in folks hearing some of what they need to improve on, or what they need to continue to learn externally as well.
So If I had all the things I wanted, I would do a mix of both, probably a little bit more heavily weighted, towards internal with external as an offering as well.
Ted: Cool. Awesome. Well, Lexi, we're right at time. It was so great having you on the show. this. Some of the best compensation discussions I've ever had. So thanks for sharing your wisdom there and also touching on a few other topics as well.
Lexi: Absolutely. Thank you for having me. This is so much fun and I'd love to do it again sometime. It'd
Ted: Sounds great. We'll talk soon. Lexi.
Lexi: Awesome. Thank you.