Compensation and Levelling Structures

It all begins with an idea. Maybe you want to launch a business. Maybe you want to turn a hobby into something more. Or maybe you have a creative project to share with the world. Whatever it is, the way you tell your story online can make all the difference.

Don’t worry about sounding professional. Sound like you. There are over 1.5 billion websites out there, but your story is what’s going to separate this one from the rest. If you read the words back and don’t hear your own voice in your head, that’s a good sign you still have more work to do.

Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.

Attracting and retaining top talent isn’t just about hiring the right people—it’s also about paying them fairly and competitively. A well-structured compensation strategy and leveling framework ensures consistency, reduces pay disparities, and helps employees see a clear path for growth within your company.

Yet, many startups and scaling businesses handle compensation reactively—negotiating salaries on a case-by-case basis, leading to inconsistencies, pay equity issues, and frustration among employees. To build a scalable, transparent, and competitive approach to compensation, you need a structured strategy and clear leveling framework.

1. Defining a Compensation Strategy: Principles & Approach

A strong compensation strategy should be aligned with your business goals, company culture, and market position. Before setting salary bands and levels, define your guiding principles:

a) Market Positioning: How Competitive Do You Want to Be?

Where do you want to sit in the market relative to competitors? Common approaches include:

• 50th Percentile (Market Median): Pay in line with industry benchmarks.

• 75th Percentile (Above Market): Pay higher than competitors to attract top talent.

• Equity-Weighted: Offer lower base salaries but strong stock options (common for early-stage startups).

Your positioning will depend on your industry, stage of growth, and ability to compete for talent.

b) Total Compensation Approach: Salary vs. Equity vs. Benefits

• Will you offer a cash-heavy package, or will you rely on equity incentives?

• What benefits do you provide beyond base salary? (e.g., learning budgets, wellness programmes, bonuses, flexible working, etc.)

• Are performance-based incentives part of your model? If so, how do they align with company goals?

c) Internal Fairness & Pay Equity

• How will you ensure internal salary consistency across similar roles?

• How will you maintain fair pay practices across gender, race, and other demographics?

• What policies will you implement to avoid compensation discrepancies caused by aggressive negotiators vs. more passive applicants?

Having clear salary bands and levels prevents disparities from creeping in over time.

2. Implementing a Leveling Framework: Creating Structure & Growth Paths

A leveling framework provides clarity on job expectations, pay progression, and career growth. It ensures that employees understand:

- Where they currently sit within the company.
- What skills or achievements they need to progress.
- How compensation increases as they move up.

a) Define Job Levels & Titles

Start by creating a structured career framework that outlines different levels within your organisation. A simple structure could look like this:

LevelTitle ExampleScope & ResponsibilityL1Associate / JuniorExecutes tasks with guidance, early in careerL2Mid-Level / Standard TitleWorks independently, owns projectsL3SeniorLeads projects, mentors others, greater ownershipL4Lead / PrincipalSets strategy, cross-functional leadershipL5DirectorManages teams, aligns with business goalsL6VPExecutive leadership, owns company-wide impact

Each level should include clear expectations for skills, experience, and responsibilities to guide employee progression.

b) Map Compensation Bands to Levels

Once you’ve defined levels, assign salary bands to each role. These should be based on:

• Market data (from benchmarking tools like Radford, Option Impact, or UK-specific salary reports).

• Internal equity (ensuring similar roles are paid consistently).

• Company size & financial position (early-stage startups may have different structures than mature enterprises).

Regularly review compensation data to stay competitive in the market and ensure internal fairness.

3. Creating a Promotion & Progression Path

A levelling framework should help employees see how they can grow within the company.

To enable career progression:

• Define skills and impact required at each level. Employees should know exactly what they need to demonstrate to move up.

• Ensure promotions are tied to measurable outcomes, not just tenure.

• Make promotion cycles structured (e.g., twice per year) to avoid ad-hoc, biased promotions.

• Equip managers with tools to guide employees in their career development.

A well-communicated framework prevents title inflation, unfair promotions, and pay compression (where new hires make more than existing employees).

4. Communicating Compensation Transparently

Even the best compensation strategy can fail if employees don’t understand it. To build trust:

• Train managers to have clear, consistent salary and promotion conversations.

• Be transparent about how salaries are set—share insights into benchmarking, leveling, and performance criteria.

• Ensure pay review cycles are structured and predictable, rather than happening only when employees push for raises.

If employees know how their pay is determined and what they need to do to progress, they’re more likely to stay engaged and motivated.

Final Thoughts

A strong compensation and leveling strategy is essential for attracting, retaining, and motivating top talent. By defining clear salary bands, career paths, and promotion structures, companies create an environment where employees feel valued, fairly paid, and invested in long-term growth.

Compensation isn’t just about what you pay—it’s about the trust and clarity you build with your team. If you need help designing a structured approach to hiring, leveling, and pay, let’s chat.