As soon as you start scaling a team, you NEED to start clarifying levels.
When I say “levels,” this is what I mean:
- What is the difference between a Software Engineer Level 3 versus Level 4?
- How is an Operations Manager different from a Head of Operations or VP of Operations?
- How does an employee move from an entry-level SDR into an Account Executive into a Sales Manager?
Not setting these levels early on in your business can lead to some big problems.
For example, let’s say you’re a hiring manager looking for engineers.
When you make offers, you might start by asking what the person is looking to make in their new job.
Confident candidates might say a big number, and less confident candidates might offer a lower range.
You’ll try to close candidates based on what they’ll accept.
But what happens when you hire multiple people into the same role and their compensation ends up being wildly different?
Is this a problem? Absolutely. Your team will talk without you at some point and compare numbers.
Someone will feel great and a few people will feel bad.
They might not immediately tell you, but they’ll feel a sense of unfairness doubly so, if they all think that they’re performing at the same job title and output.
Levels allow you to compensate fairly, they remove the advantage of a good negotiator. When someone asks for more, you can revert to the levels to backstop your decision making.
People in similar jobs with similar responsibilities and similar performance should be compensated similarly.
To be fair, you need to set levels as you scale your business (definitely after ~20 employees).
The “how to set levels” part is pretty easy for you to execute (and easy for me to explain).
a) Levels already exist in other companies and are publicly available.
So search for these roles in other businesses, copy them, and adapt them into your own business.
The easiest place to find this info is on websites like Carta, levels dot FYI, opencomp, your HRIS system.
b) You can create levels yourself.
This is time consuming and I don’t recommend it.
However, it might be hard to find existing job descriptions for a role in your company that is flexible, like a “Head of Operations.”
So, you’ll have to create those levels yourself.
So, if you have to create levels yourself, the easiest place to start is with these 5 core pieces of info every job description needs,
- job summary
- responsibilities
- required skills
- expectations
- compensation
By setting levels and pay bands early on, you can hire candidates quickly and easily.
When your team inevitably compares compensation, you want everyone to walk away with the feeling that it was fairly done.
Last thing…
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