A compensation strategy sets out what the organization pays for, where it positions pay against the market, how pay is structured across levels, and how decisions are checked for fairness. It is owned by the head of total rewards and agreed with the chief executive, the chief financial officer and the compensation committee of the board.
A complete compensation strategy for a fictional organization: publicly listed clinical-stage biotech company with a lead program in Phase 3 and no product revenue.
| Organization | Publicly listed clinical-stage biotech company with a lead program in Phase 3 and no product revenue (450 staff) |
|---|---|
| Ambition | Pay every employee within a defined range at the market median, keep the clinical team intact through the Phase 3 readout, and do it inside the cash runway and the share pool. |
| Horizon | 2 years |
Headcount tripled in four years and pay was set offer by offer. There are 140 job titles for 450 people and no ranges. Base payroll is $74 million. Against draft ranges, 104 employees (23%) sit below the minimum, most of them long-tenured staff passed by newer hires. The share price is 55% below its peak, so 61% of outstanding options are underwater and the annual equity burn rate has reached 4.2% against a peer median of 3.2%. Voluntary turnover is 16% overall and 24% in clinical operations, biostatistics and regulatory affairs, the teams running the Phase 3 trial that reads out in mid-2027.
Challenges| What we pay for | We pay for the level of the role, sustained performance in it, and skills that are scarce in drug development. We do not pay for tenure, for negotiating skill at hire, or for holding an outside offer. |
|---|---|
| Market position | Base pay and target total cash at the 50th percentile of the comparator group. Ranges for clinical operations, biostatistics, regulatory affairs and CMC are set at the 60th percentile. Equity is targeted at the 50th percentile by grant value, with more of it at risk at vice president level and above. |
| Transparency | Every employee can see their level, the range for it and their position in the range. Ranges are posted in job advertisements. Individual pay is not published, and managers are trained to explain how a pay decision was reached. |
| Comparator group | 22 publicly listed biopharma companies that are clinical-stage or within two years of a first launch, with 250 to 900 employees and a market capitalization of $800 million to $4 billion. The compensation committee approves the list each year. For lab and corporate roles below director, the comparison is the wider life sciences market in our two hub cities. |
|---|---|
| Data sources | Two life sciences compensation surveys matched by job family and level, peer proxy filings for executive pay and equity burn rate, and our own offer data: declined offers and the competing terms candidates report. |
| Review frequency | Ranges are re-priced every October for the January cycle. The four hot job families get a second check in May, with range moves only if the market midpoint has shifted by 4% or more. The comparator group is reviewed each September. |
| Level | Range | Midpoint | Roles |
|---|---|---|---|
| P1 Associate | $76,000 to $114,000 | $95,000 | Research associate, clinical trial associate, accountant |
| P2 Senior associate | $100,000 to $150,000 | $125,000 | Scientist I, clinical research associate, quality associate |
| P3 Senior professional | $128,000 to $192,000 | $160,000 | Senior scientist, clinical trial manager, senior biostatistician |
| P4 Principal or associate director | $160,000 to $240,000 | $200,000 | Principal scientist, associate director of regulatory affairs |
| M5 Director | $196,000 to $294,000 | $245,000 | Director of clinical operations, director of CMC |
| M6 Senior director | $236,000 to $354,000 | $295,000 | Senior director of biostatistics, head of quality |
| E7 Vice president | $288,000 to $432,000 | $360,000 | Vice president of clinical development, vice president of finance |
| Group | Base pay | Variable pay | Equity | Benefits |
|---|---|---|---|---|
| Associates (P1 to P2) | 50th percentile; about 85% of target total cash and equity | Bonus target 8% to 10%, company goals only | Restricted stock units, vesting over four years | Full medical, 5% retirement match, stock purchase plan |
| Professionals (P3 to P4) | 50th percentile, 60th in hot job families | Bonus target 12% to 18%; 75% company, 25% individual | Restricted stock units; annual refresh by level | Same as associates |
| Directors (M5 to M6) | 50th percentile | Bonus target 20% to 25%; 75% company, 25% individual | Half options, half restricted stock units | Same, plus 12 weeks of severance on change of control |
| Vice presidents and executives | 50th percentile | Bonus target 30% to 40%, company goals only | Options and performance units tied to regulatory milestones | Same, plus executive severance terms set by the committee |
| Field and launch roles (from 2028) | 50th percentile | Sales incentive plan, designed after the readout | Restricted stock units at hire | Same as associates, plus car allowance |
| Decision rights | Managers recommend within a merit matrix based on performance and position in range. Total rewards approves anything outside the matrix. Pay above the range maximum or an off-cycle adjustment needs the chief people officer and the chief financial officer. The compensation committee approves executive pay, the bonus pool, the equity budget and the comparator group. |
|---|---|
| Pay equity review | A regression-based pay equity analysis runs before each January cycle and again on the proposed increases, controlling for level, job family, location and time in level. Unexplained gaps above 1% are corrected in the same cycle from a separate fund. Starting pay is checked against peers in the same level before every offer goes out. |
| Budget | For 2027: a 3.5% merit budget ($2.6 million), a one-time $1.7 million fund to bring everyone to range minimum, and 0.5% for promotions. The bonus pool is funded at target only if corporate goals are met. Equity grants are capped at a 3.5% burn rate in 2027 and 3.3% in 2028. |
Priorities and measures
With 140 titles and no ranges, pay follows whoever negotiated hardest. A single architecture is what lets us fix compression once instead of one counteroffer at a time.
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| Employees paid below the minimum of their rangeMilestones: 10% by Q2 2027 | 23% | 2% | Q4 2027 |
| Employees with a compa-ratio between 0.85 and 1.15Milestones: 70% by Q2 2027 · 80% by Q4 2027 · 86% by Q2 2028 | 58% | 90% | Q4 2028 |
| Off-cycle pay adjustments per yearMilestones: 50 adjustments by Q4 2027 | 87 adjustments | 25 adjustments | Q4 2028 |
Turnover of 24% in the teams running the Phase 3 trial is the largest people risk to the readout. These four job families are where paying above median earns its cost.
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| Offer acceptance rate in the four hot job familiesMilestones: 78% by Q4 2027 | 68% | 85% | Q4 2028 |
| Voluntary turnover in clinical operations, biostatistics and regulatory affairsMilestones: 18% by Q4 2027 | 24% | 14% | Q4 2028 |
With 61% of options underwater, most employees hold equity worth nothing today, yet burn rate is a full point above peers. The grant mix has to change, not just the grant size.
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| Annual equity burn rateMilestones: 3.5% by Q4 2027 | 4.2% | 3.3% | Q4 2028 |
| Employees holding unvested equity worth at least half of base salaryMilestones: 52% by Q4 2027 | 34% | 70% | Q4 2028 |
People leave over pay they do not understand as often as pay that is low. Managers cannot explain decisions today because there has been no framework to point to.
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| Unexplained gender pay gap after controlsMilestones: 2.2% by Q1 2027 | 3.4% | 1% | Q1 2028 |
| Employees who say they understand how their pay is setMilestones: 50% by Q4 2027 | 31% | 70% | Q4 2028 |
The same structure with a prompt in every field. Copy it, or download it as a Word or Excel file.
| Organization | [Describe your organization in a few words, with its size] |
|---|---|
| Ambition | [One sentence on where you want to be at the end of the plan] |
| Horizon | [How long the plan runs, for example 12 months] |
[Where things stand today: the facts that make this strategy necessary]
Challenges| What we pay for | [Your what we pay for] |
|---|---|
| Market position | [Your market position] |
| Transparency | [Your transparency] |
| Comparator group | [Your comparator group] |
|---|---|
| Data sources | [Your data sources] |
| Review frequency | [Your review frequency] |
| Level | Range | Midpoint | Roles |
|---|---|---|---|
| [Level] | [Range] | [Midpoint] | [Roles] |
| [Level] | [Range] | [Midpoint] | [Roles] |
| [Level] | [Range] | [Midpoint] | [Roles] |
| Group | Base pay | Variable pay | Equity | Benefits |
|---|---|---|---|---|
| [Group] | [Base pay] | [Variable pay] | [Equity] | [Benefits] |
| [Group] | [Base pay] | [Variable pay] | [Equity] | [Benefits] |
| [Group] | [Base pay] | [Variable pay] | [Equity] | [Benefits] |
| Decision rights | [Your decision rights] |
|---|---|
| Pay equity review | [Your pay equity review] |
| Budget | [Your budget] |
Priorities and measures
[Why this priority matters now, in one or two sentences]
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
[Why this priority matters now, in one or two sentences]
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
[Why this priority matters now, in one or two sentences]
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
[Why this priority matters now, in one or two sentences]
| Outcome | Baseline | Target | Due |
|---|---|---|---|
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
| [Metric you will track] | [Where it is today] | [Where it should be] | [When] |
Start with the job architecture. Ranges, benchmarking and pay equity analysis all depend on roles being leveled consistently, so do that before debating percentiles.
Choose a comparator group you compete with for people, not only for customers or investors. Check it against where your last 20 leavers went and where declined candidates took jobs.
Pick a market position you can fund for several years. Price the gap between current pay and the new ranges before announcing a percentile target.
Decide where you will pay above your general position, and limit it to a few job families with evidence of scarcity such as turnover and offer acceptance.
If you grant equity, set guidelines as a value by level and model the burn rate and overhang with finance before the cycle.
Write down who can approve what, especially exceptions. Most pay inequity enters through off-cycle adjustments and starting salaries.
A plan only works if it is reviewed on a rhythm. This is the cadence the example assumes.
| Check-in | Outcome owners update progress and confidence weekly. |
|---|---|
| Review | Priority owners review outcomes and unblock initiatives monthly. |
| Reset | Leadership revisits priorities and targets quarterly. |
Tability keeps this cadence for you. Each priority becomes an objective, each outcome a key result with its baseline and target, and each initiative a tracked task. Owners get a check-in reminder and the plan shows what is on track.
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It should include a pay philosophy, the market you benchmark against and your target position in it, the pay structure with levels and ranges, the mix of base, variable pay, equity and benefits for each group, and the governance for decisions and pay equity checks. Add the budget and a few measures such as compa-ratio spread and turnover.
A compensation philosophy is a short statement of what the organization pays for and where it aims to sit against the market. It usually covers the target percentile, the balance between fixed and variable pay, and how open the organization is about pay. Every later decision on ranges and increases should be traceable to it.
Compa-ratio is an employee's base salary divided by the midpoint of their pay range. A value of 1.0 means pay is at the midpoint. It is used to spot people who are low or high in range, to guide merit increases through a merit matrix, and to compare pay across teams without disclosing individual salaries.
The 50th percentile is a sound default because it is competitive and affordable, but it is a choice, not a rule. A common approach is to pay at the median overall and higher for a few scarce skills. What matters is that the position is funded, applied consistently and reviewed each year against fresh market data.
Review market data and pay ranges once a year, before the annual pay cycle. The philosophy and structure should hold for two to three years unless the business changes sharply, for example through a funding event, an acquisition or a move into commercial operations. Job families with fast-moving markets may need a mid-year check.
An HR strategy sets out what the business plan requires from the workforce and how the organization will hire, develop, pay and keep the people needed to deliver it.
A recruitment strategy sets out how many people an organization needs to hire and when, where it will find them, and how it will select and win the ones it wants.
A talent management strategy sets out which roles the organization cannot run without, how successors for them are identified and developed, and how the people in them are kept.
Compensation strategy template
Horizon: 2 years
4 priorities · 9 outcomes
Targets are illustrative. Adapt them to your baseline before you start.