Every role has a minimum and maximum base compensation that is reviewed and determined from market rates as published by PayScale. We may apply an adjustment factor to the market rates if we don't agree with how the market values a role, or use a comparative position as there might not be enough market data to statistically support a direct match for the role that we want data for.
We use two geographic reference points within PayScale to gather our compensation data from;
Toronto, Ontario, Canada
and Lenexa, Kansas, USA
If you live in Canada, regardless of where in Canada, we use the Toronto market data and Canadian dollars. And if you live outside of Canada we use the Lenexa data and American dollars.
And within these 2 locations we compare ourselves to firms within the software as a service industry with 1,000 employees. We don't have 1,000 employees but firms of our size tend to pay less than they do and we want to make sure that we are competitive with them. The PayScale Market Data for our roles (what they call Jobs) that we are currently either using or considering using can be found here.
To determine where you fall within the compensation range for the role you hold we use your peer review scores for role responsibilities and interpersonal skills combined with how long you have been with the company (loyalty). We give each of these 3 factors the following weights in our calculation:
- 50% Role Responsibilities (from peer review)
- 25% Interpersonal Skills (from peer review)
- 25% Loyalty (# of years with the company divided by 10 years)
The weights are applied to to determine your recommended compensation as per the following formula:
Recommended Compensation = Min Compensation + ((Max Compensation - Min Compensation) * (0.50 * Role Score + 0.25 * Interpersonal Score + 0.25 * Loyalty))
The results of your recommended compensation calculation are a guideline, not a fixed rule. If you are scoring consistently for 2 to 3 quarters in a row higher than your current compensation then your team leader should recommend an increase for you, and if you are scoring consistently lower than you are currently paid you and your team leader need to get the performance differences addressed. One further clarification is that we don't increase a person's compensation from one year to the next based upon a cost of living allowance or by amount of time from the last date a person's compensation was increased. We use market data and our recommended compensation calculation to determine what base compensation increases need to be made and when.
If your role includes variable compensation for achieving specific and quantifiable goals (for example achieving revenue dollars or growth rates) we determine the variable compensation paid at the end of the current month by dividing the actual result for the preceding month by the goal amount and multiplying that by the Variable Target for the role divided by 12.
For greater certainty:
(Actual Result / Goal Amount) X (Role Variable Target / 12)