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Earlier today I had an opportunity to chat with CNBC Make It about a growing trend in compensation: the "Peanut Butter" raise. The Strategic Risk My take is that market leverage is a temporary tactic, but retaining top-tier performance is a long-term strategy. Right now, some companies may see the cooler job market as an opportunity to simplify their merit process. They lean into "normalizing mediocrity" by spreading a thin 3% budget across the board, assuming that lower tu

And you hope they do not find out. Every Founder and VP of People dreads this moment during a growth spurt. You find the perfect candidate. They are a game-changer. But the market price for their role has jumped 20% since you hired your current team. To land them, you must break your own pay band. You sign the offer letter, but your instincts tell you it is a mistake. Because you know the clock is ticking. Eventually, people talk. And when your loyal high-performer finds o

It is the silent struggle of every HR leader in a growth company. You took this role to lead the People Strategy : • Building a high-performance culture. • Developing your next layer of leaders. • Driving the talent acquisition roadmap. But then the "Comp & Benefits Reality" hits. Instead of developing people, you get pulled into a different type of strategic work. One that requires deeper technical and financial engineering. It starts innocently enough. • "I'll pull a quick

It is the moment every founder worries about. Your key player puts in their notice: "I’ve been offered a role at a competitor for 20% more." The instinct is to panic. You immediately think: "I have to match it. I can't afford to lose them right now." Here is the paradox: If you convince them to stay solely by matching the money, you haven't really kept them. You’ve just delayed them for another six months. Why? Because rarely does someone leave a job they love just for money.

There is a risk organizations face for retention and it isn’t when a project fails or a client churns. It is the day after bonuses hit bank accounts. As a founder, you view the bonus cycle as a "Lock-In." You think, "I just wrote a huge check. They know they’re valued. We’re good for another year." But your top performers view it differently. They view the bonus as a "Settlement." The salary paid for their time. The bonus paid for their results. The ledger is now balanced

We need to kill the "Annual Bonus." For decades, companies have relied on this tool to drive performance. The logic seems sound: "Work hard for 12 months, and we will give you a big check in December." But in a modern startup, this logic is broken. 𝗧𝗵𝗲 "𝗧𝗶𝗺𝗲-𝗚𝗮𝗽" 𝗣𝗿𝗼𝗯𝗹𝗲𝗺: For a reward to reinforce a behavior, it must happen immediately after the action. The Annual Bonus breaks this rule. You are asking an employee to hustle in February for a reward they 𝘮𝘪�

You have a 3% merit budget. Your managers are staring at a spreadsheet, trying to decide who gets what. The human instinct is to avoid conflict. So, managers do what is called "spreading the peanut butter." They give the low performer a 2.5% raise (to be nice). They give the top performer a 3.5% raise (to stay within budget). Everyone gets a thin layer. It feels fair. It feels safe. 𝗕𝘂𝘁 𝗺𝗮𝘁𝗵𝗲𝗺𝗮𝘁𝗶𝗰𝗮𝗹𝗹𝘆, 𝘆𝗼𝘂 𝗷𝘂𝘀𝘁 𝗵𝘂𝗿𝘁 𝘆𝗼𝘂𝗿 𝗿𝗲𝘁𝗲𝗻𝘁𝗶𝗼𝗻. Her

I see the same scenario play out in startups consistently. A Founder fights hard to get a "Yes" from their top candidate. They stretch the budget. They offer $15k over ask. They think they have won on the numbers. But the candidate still walks away. Why? Usually, it’s because the Offer Letter looked like a black box. The Equity section simply said: "Option to purchase 15,000 shares." To a Founder, that looks like generosity. To a smart candidate, that looks like a lottery tic

Most founders I meet are guessing at their compensation strategy. Here is a 5-Point "Comp Health Check" you can use to stop the guessing game. 1. Philosophy : Do you have a written statement defining how you pay relative to the market? Warning Sign: "We pay what it takes to get them." Healthy Sign: "We target the 75th percentile for engineering and 50th for admin." (For example). 2. Data : When was the last time you benchmarked your roles against real market data? Warning

"Market Rate" is a misleading term. It implies there is a specific sticker price for talent. Like a gallon of milk. Leaders often think they can just look up "VP of Engineering" and find a single answer. But in the real world, compensation data isn't a price tag. It is a scatter plot. If you pull the raw data, you will see a massive range for the exact same job title. Why? Because the "market" is a messy mix of bootstrapped startups (paying in equity) and Big Tech giants (pay

I see a specific inefficiency in almost every Series B payroll. A founder looks at their budget and sees a $180k - $220k line item for a "VP of Operations" or "Head of Product." On paper, the compensation matches the market data for an executive. But in reality, the founder is still doing the job. They are still designing the strategy, making the final call on vendors, and carrying the mental load. This happens because we confuse Reward (Performance) with Role (Scope). Whe

It is a predictable cycle in the startup world. A founder sits with a pool of cash at yearend, wanting to reward the team. But because no targets were set at the beginning of the year, they are forced to decide bonus amounts based on how they "feel" about someone's performance over the last three weeks. This is the "Vibe-Based Bonus." Founders think this is generosity. Employees experience it as anxiety. If your team doesn't know how to earn the bonus, they won't try to. The

Reward Factors Tip: Your biggest cost this quarter? Employee turnover. The average cost of replacing a high-performing employee can exceed 1.5x their salary. That loss does not just hit the budget; it stalls momentum and drains morale. The solution is not a quick fix—it's a compensation audit. Before you hire another recruiter to replace those roles, understand the reasons they are leaving. The Exit Data (Market Data & Retention): Avoid relying on exit interviews. Instead, a

Compensation alone does not buy loyalty. I have seen early-stage leaders who fall into the trap of thinking that the highest offer will win the best talent. While a competitive offer is foundational, today’s top talent wants more. They want purpose. They need to know their work has an impact. This is where your mission becomes your more powerful recruiting tool and the core to your employee value proposition. When your team is genuinely connected to your company’s “why”,

The compensation plan that worked when you were a smaller team might be ready for an upgrade. As businesses scale, compensation becomes a strategic tool, not just a line item. The transition from a simple system to a strategic one is a common growth challenge. Not long ago I worked with a leader who was concerned with their compensation processes and market methodologies. Their pay structure, a confusing mix of historical data, some market data, and best estimates, was trac

The biggest trend in 2025: Pay transparency is non-negotiable. This is no longer a theoretical debate. It is impacting year-end bonuses and salary reviews, and leaders need to be prepared. The conversation is not ‘if’, but ‘when’. Here is how leaders can prepare to answer the difficult questions: The Bonus Mystery. Why is my bonus this amount? Many companies do not have a clear formula, or are reluctant to share how it was determined, which causes confusion instead of in

Hiring someone new or giving a raise? If your compensation data comes from a quick internet search or a guess, you’re building your team on a shaky foundation. The true costs of "guessing on salaries" can be higher than you think. Here are a few to consider. 📉 Eroding Trust & Low Morale. Inconsistent pay doesn’t just lower morale; it makes it nearly impossible to build a fair, transparent, and high-performing culture. 🏃‍♀️ Risk Losing Your Best People. Top performers know