Building a Strong Comp Foundation Without Losing Flexibility

When it comes to compensation, many organizations find themselves trapped between two extremes: being so rigid they lose top talent, or being so reactive they blow their budgets.

In a recent webinar moderated by Bettercomp CSM Erika Parisi, MorganHROpens in a new tab Founder Laura Morgan, and Foghorn TherapeuticsOpens in a new tab VP of Total Rewards and People Operations Alena Reva sat down to discuss how to build a compensation foundation that is resilient, transparent, and, most importantly, built to last through exciting and stressful times.

Here are the three key focus areas to help you strengthen your compensation strategy without sacrificing the agility your business needs.

1. Ground Your Philosophy in Reality, Not Aspirations

A compensation philosophy shouldn't just be a "poem on the wall." For it to be effective, it must be a joint product created with finance and leadership, rather than an isolated HR exercise.

Alena Reva highlighted the danger of "aspirational" philosophies that don't match the company's financial reality. If your philosophy says you hire "top-tier experts" but your budget only allows for "rising stars," you create a friction point that frustrates recruiters and leadership alike.

To move from aspiration to reality, leaders must actively assess the internal tension within their executive teams to identify where perspectives differ on core values like rewarding performance versus honoring tenure. Bridging this gap requires ensuring that the written philosophy is grounded in what the company can actually fund today, while simultaneously maintaining a separate two-to-three-year strategy that serves as a roadmap for where the program intends to go. This "tension-driven" approach allows the philosophy to act as a stable anchor while the strategy provides the necessary room to maneuver through immediate hiring challenges.

2. Build Modular Architecture for Scalability

One of the biggest hurdles for fast-growing companies is "over-engineering." When you are small, it’s tempting to create a specific title for every unique role. However, as Laura Morgan pointed out, every new level or unique job title adds cost and complexity.

The goal is to move from Level of Knowledge (years of experience) to Level of Work. As AI infuses into more verticals, the very definition of "work" is changing. Your architecture needs to be sturdy enough to provide a career path but "broad" enough to allow for shifting roles.

The most effective way to avoid the trap of over-engineering is to prioritize simplicity and internal equity over granular market parity, keeping levels broad enough so that new roles can slot in naturally as the company pivots. By aiming to build a "modular" framework that can carry the organization to add another ~500 employees without requiring a total redesign, comp leaders prevent the creation of a rigid system that becomes obsolete and expensive the moment the company starts to scale. This approach ensures that the structure supports the business's growth trajectory rather than acting as a bottleneck.

3. Leverage Technology to Move from "Historian" to "Advisor"

Many compensation teams are slowed down by manual work: managing spreadsheets, aging data, and cleaning titles. Laura Morgan warns that if you are spending your time behind a spreadsheet, you aren't spending it where the real value is: in front of leadership, providing guidance.

Technology like AI and specialized comp platforms shouldn't just be seen as an expense, but as a way to "age" your data in real-time and automate the administrative friction that delays hiring.

Transitioning from a data "historian" to a strategic "advisor" requires a commitment to automating the routine and administrative tasks that traditionally consume a compensation team's bandwidth. If a task like cleaning job titles or aging data is done more than once, it should be streamlined with technology to avoid keeping comp teams in the weeds of manual data work. This shift allows the team to focus on the full story of the data rather than the small snapshot they can see when sifting through the minutia of comp data. Using technology to analyze long-term market trends prepares teams to create long-term plans rather than overreacting to single, outlier data points from individual candidate offers. By maximizing the switches on their tech stack, comp leaders gain the time necessary to build the human connections that ultimately drive business success.

Building a strong foundation doesn't mean being inflexible. In fact, a truly strong foundation is what enables flexibility. By aligning your philosophy with finance, building a modular architecture, and leveraging technology to handle the "grunt work," you free up your team to be the strategic advisors your business needs.