The Hiring Edge

The Truth About Compensation: Pay Transparency, Bonuses & Retention

• Josh Matthews • Season 3 • Episode 76

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Is your pay strategy quietly driving talent out the door? In this no-fluff episode, Josh Matthews sits down with compensation expert Scott Trumpolt to break down pay transparency laws, broken bonus systems, and how to finally build comp plans that retain and motivate. If you're hiring, leading, or scaling, this one’s a game-changer.

🔍 Chapters:

00:16 – Why your comp strategy might be broken
 01:27 – What pay transparency laws get wrong
 05:06 – The problem with static pay bands
 11:35 – Building trust through variable pay transparency
 19:22 – The truth about salary data (Glassdoor, Salary.com, etc.)
 22:58 – Pay equity in remote vs. on-site roles

🎙 Guest: Scott Trumpolt
Founder, HRCompensationConsulting.com
LinkedIn: Scott Trumpolt

📌 Host: Josh Matthews | The Hiring Edge – Smarter Teams. No Fluff.

Scott Trumpholt:

I think this is really important. I think you need to start talking about that. Pay range is like this is a living thing, it's not static, okay.

Josh Matthews:

I'm Josh Matthews. This is the Hiring Edge Smarter teams, no fluff, here we go. Struggling to attract top talent or keep your best people from jumping ship, compensation might be the silent culprit. Today's guest, scott Trumple, helps companies fix broken pay systems. He works with leaders who are tired of guesswork around raises, unclear pay bands or losing people to better offers. His focus is simple bring structure and transparency to compensation so it actually supports retention, performance and growth. If your team is frustrated by unfair pay or if you're unsure how to build a system that scales, scott's got the answers. Scott, welcome to the show.

Scott Trumpholt:

Nice to have you. Thank you so much, Josh, for having me on your program and for giving me the opportunity to address your listeners and your viewers.

Josh Matthews:

I appreciate it. You know this is. We've been running this show for four years and you are the very first compensation expert that we've ever had on. I feel like a fool a little bit for not having someone with your depth of experience and knowledge about something so critical, like so critical, on the show before let's go ahead and just dive into it.

Scott Trumpholt:

Josh, let me just say that I've had other podcast hosts say the same thing, and it doesn't surprise me, because compensation itself is very much, or has been, in a black box, and so for the past 13 years I've really been trying to take it out of the shadows of where it belongs, but do it in a way that makes sense for the business.

Josh Matthews:

Yeah, I'm glad to hear that 12 to 24 months or so, a number of states have begun to pass laws that require transparency and compensation with the job description Either if I guess. I guess I've heard it. Some states you must post it in the description. Other states say you must reveal it if asked things like that. Talk for a minute about what's driving that. There's got to be a real reason here.

Scott Trumpholt:

Yeah, what's driving it really is the younger generations that are now part of the workforce. That's what's driving it, but I think and you're right the pay transparency laws. There's probably about 10 states that either have passed such laws, or I know Minnesota and Massachusetts. I think those are the two that have some coming into effect in 2025. I'm not 100% certain.

Josh Matthews:

No, I think you're right. I think it's in July.

Scott Trumpholt:

Yeah, so it's still not the majority of states, but again, it's partially a generational thing. They're just not thinking in the same terms. But what concerns me is that I think these laws obviously laws have to be written very carefully and they often don't get the full effect that maybe they want to because it's just part of the way they write the laws. But I think they're missing the mark a little bit with these laws and actually might backfire. And the reason I say that is because what a lot of these laws say in the various states, even though there can be some variation, a lot of them say well, you have to post part of the range, you know, the minimum to the midpoint, the competitive midpoint of the range. Or some states may say you know the minimum to the midpoint, the competitive midpoint of the range. Or some states may say you know, post the whole range. But to me that's just a dead end.

Josh Matthews:

My experience has been that when you provide a range, the candidates only remember the top number, yeah, and the companies only remember the bottom number. Everyone gets disappointed, right, and now we're in. Then you're jumping into negotiations, right, and you're dealing with concepts of equity versus Darwinian meritocracy, right, where you know employee A might be making $135,000. You know employee A might be making $135,000. And it's posted for the same job $140,000, because the market's changed, or $145,000. And people do not everybody but people track this stuff. Some of this transparency. It just feels to me kind of like you were saying, but for possibly a different reason. It might create some bad blood.

Scott Trumpholt:

Yeah, and I think again, what's missing from the equation? I think that the dialogue that you have with a potential employee or one that's already within the organization because again, some of these pay transparency laws impact that population as well is to slowly change the culture and the dialogue of how you address pay issues. I think this is really important. I think talking about that pay range is like this is a living thing. It's not static. Okay, this is very important. The idea is that you may start here, but it's dependent upon you to a great degree, not just your skills that you acquire, but skills that fit the business need and understanding, because when the employee or the candidate starts to understand what the needs are of the business, I think they become more connected to it. And this is part of this younger generation they really want to feel connected, that their work has value and they want can make more money and I can get a bigger job in a couple of years. But then again I see other young employees that have been at companies for some time and I've talked to a few of them about this and it's like it's changing the dynamic where you want to grow, but let's grow where we already are instead of having to go somewhere else. And if we can make this challenge and this is where something else happens that's very important, if we can arm managers as human resources with the kind of tools where they focus on the career development aspects.

Scott Trumpholt:

What's the next step for this individual within your department? Or does it mean they have to move laterally within the organization? And when you look at employee engagement surveys or you look at reasons for turnover, compensation is not at the top. It's an easy one for employees to use. Yeah, leaving the company because it doesn't ruffle any feathers. People can understand that. But the reality is is that sometimes it's a lack of employee engagement and oftentimes they're not having that engagement directly with the person that matters most to them in the organization, which is their direct manager. And it's not the direct manager's fault either, because they may not be getting the kind of tools. They're very busy with the other parts of what they do. They're trying to run a business.

Josh Matthews:

Well, look, it's not even part of their culture. No one's doing it for them. How would they even know? How would they even begin to know? And I see this a lot with interviewing, right, everybody knows that everyone who is an interviewer thinks that they're a really good interviewer, and it's just not the case, and I'll pound this drum. I'll beat this drum probably till the day I die. It's just the case. So I want to ask you a couple of questions about this Now.

Josh Matthews:

One of the challenges that I've witnessed is around salary surveys. When we talked last week, you shared a little bit about your access to some of these really incredible tools that the average company likely does not. You know they're not paying for it, and even if they paid for it, they wouldn't even be able to analyze it accurately. You've got 30 years in the industry, right, so you're able to do that and you're an expert in your field. But for the organizations that aren't investing in consulting from you or from someone like you, it begins to be a real challenge. So, with these smaller companies, when it comes to say how they're delivering bonuses, oftentimes it's just say how they're delivering bonuses. Oftentimes it's just you know whatever the manager or whatever the owner feels like giving. And for some of these big ones it's very, very structured.

Josh Matthews:

But I interview a dozen people a week and I ask them. I asked someone just this morning. I said you know they work for a big company. I said what was your bonus structure like? It's like oh, I don't know. So what do you think it was like? And it turned out it was about 8%, 8 to 10% of his compensation. It's just not clear. People aren't talking, they're not communicating and, frankly, a lot of candidates, at least in the Salesforce ecosystem, when I bring up bonus because it's like hey look, you're probably going to get 8% or 10% or you're going to get 20% bonus on this, they are so fed up, especially the people who've been doing it for 10 years. They're like Josh, I'm just going to tell you, base pay is what reigns and the bonus thing. I've been burned so many times. What would you say to these companies?

Scott Trumpholt:

you say to these companies. Well, the problem is and you alluded to this is the fact that these individuals, first of all, have no clear guidance, and I have seen companies that do it well. So this is what I'm going to respond off of you know kind of best practices. You need to take the time at a company level to explain how this bonus is influenced by the workers. In that area there needs to be a discussion and you can't take a one-size-fits-all approach. I'm all for simplicity within an incentive plan, I'm all for clarity, but the most important thing is to pick objectives that different jobs can reasonably reach and they understand at the beginning of the incentive period what's going on and how this, what different impact there can be based upon their contribution to the organization. So one of the things when I work on an incentive plan, one of the things that I provide up front, is a tool where each employee at the beginning, before the plan even starts, before day one, two weeks before or so, they get a spreadsheet that shows okay, here are your objectives and here are the weightings for those different objectives. But the most important part is that they can go in there and they can manipulate it. They can say okay, let's say I do 80% on this one and I do 50% on this one, and it automatically calculates at the beginning of the year what their bonus is. So they can manipulate and they can see firsthand. They can eyeball. They don't know if this is going to transpire, but it gets them more involved.

Scott Trumpholt:

By having we talked about pay transparency, now we're into variable pay transparency, but I believe this is very important. You know it's just an individual bonus calculator, so it's very important. That kind of transparency in a variable plan, not at the end of the quarter, and there shouldn't be a problem because you have to give them a plan document and usually what happens is they create a plan document and they send it out to employees, but there's no overall engagement. And as a recruiter, what I would love to see happen is the recruiter is the first person. So important in this process is the recruiter, because they're the first representative that the individual often will see.

Scott Trumpholt:

And so if that recruiter is armed with some level of detail not getting into the weeds again too specific, but say hey, we've got a team bonus component, that's part of it to encourage that everybody isn't just competitive with each other. But if the team doesn't do well, this doesn't happen. This happens and you're going to get this percentage. But, more importantly, here's how it breaks out in terms of the measurements and what weightings are important for you to understand. Overall, everybody should be tied into the overall goal, even if they can't influence it, because you need to be able to take the incentive. However, I am not going to give the same measurements and the same weightings for an HR professional as I am a operations professional or a sales professional.

Josh Matthews:

Can I jump in? I want to ask you about the team thing for a second and just dive a little bit deeper on that. Sure, there have been so many studies around team incentives. It might be you know, I've seen these at universities around grades. I've seen them at organizations around EBITDA, which I actually think is kind of a neat model because it protects the company from overextending themselves.

Josh Matthews:

But when an organization is creating team incentives, how effective is that in creating peer unity or peer pressure to complete the goals? And what percentage of people might you think you don't have to be specific, but it just feels to me like there's always going to be one or two bad actors that ride the coattails of everyone else. If you've got a team of 10 and two or three are dragging their feet and there goes 20 or 25 or 30 percent of your bonus because the team didn't meet the objectives, are organizations that you work with? Are they actually really leveraging that to understand okay, these people need to go right, or hey, these seven people crushed it. Now it feels punitive to the people who are working so hard.

Josh Matthews:

Let's face it, people are not created equal. Maybe in the eyes of God, but not in the workforce. They just aren't. Some people have a great work ethic, some people don't. Some people put the extra time in. Some people have found greater happiness with life balance and it's less important to them. So when we're talking about these kinds of dynamics and we're trying to incentivize a whole team, something inside me is just sort of screaming like that feels broken. What would you say about that?

Scott Trumpholt:

Well, the first thing I would say is I understand and I would say that it's all in the design. Oftentimes, what I'll see is management decides yeah, we got to put a team component in there, and they make it laughable, they'll put 10%. And they make it laughable, they'll put 10%. So the weighting has to be appropriate. It has to be significant enough that people pay attention to it, but, on the other hand, not so much that you've got to draw clear distinctions in terms of individual performance. And, by the way, if there are poor performers weighing down that group, they need to do a performance improvement plan and all of these things.

Josh Matthews:

Three reprobands recorded all this stuff. Yeah.

Scott Trumpholt:

What I'm saying is is the incentive plan, which has an individual component. That is an ideal part of this process, where you know you've got two or three people that are not hitting their numbers and their numbers are designed to be similar to those doing the same type of work. So there you've got what you need from a performance standpoint. So weeding out the poor performer should not be as difficult as it is, because you've got hard evidence that they were assigned the same individual objectives as these other people and they did not measure up objectives as these other people and they did not measure up. So I think it can be used more as a measuring stick, not just to pay incentives but to also recognize who the lowest performers are and what are we going to do with them. It doesn't necessarily mean immediately getting rid of them, but maybe their talents are best suited somewhere else. But the bottom line is you've got to have balance in an incentive plan and I think sometimes I see a team bonus component that's only worth 10%, or they put it as part of a quarterly plan. No, that's really more. Measure things on an annualized basis. And I agree with you EBITDA is very good, because people, either directly or indirectly. If the company doesn't do the earnings, then there's no reason for an incentive plan, but an incentive plan is put in there to help encourage it. So I think it's about balance and it's not that you can't have a team. I believe you need team and individual goals, but they need to be weighted appropriately and then, at the end of the process, use it as a clear documentation for distinguishing between the top performers and the lower performers.

Scott Trumpholt:

And, by the way, the other part that's really important to me is to really make it market-based, and I don't mean just seeing what the best practice is out there, but literally saying because I've got the market data. So if someone, if I will ask a client, I will say what would you consider top performance? Oh, top performance would be 140% of target performance. They hit that level of performance. We will pay them in total cash compensation equivalent to the 80th percentile. That means that only 20% are making more than that.

Scott Trumpholt:

And again, it's about transparency, josh. It's about transparency. And that's the other thing about putting it into an individual transparent pay calculator, which I do for my clients so they can share that. Because then imagine not only showing the performance but saying to an employee, I, to their face, say if you hit 120% performance, you are going to be paid at the 80th or the 85th percentile of your market value, not the 50th percentile which everybody hovers around, because that's the competitive midpoint. But you know what? If you're only 10% higher, that's great, we're going to pay you higher than market, but it's only going to be at the 60 or 65th percentile. This is really important because then they can see how they can grow their pay through their performance.

Josh Matthews:

Transparency. Yeah, it makes an awful lot of sense to me. It makes me think a little bit around how some clients that I work with and it's just kind of known people jump on chat, gpt or they grab whatever recruiting company's salary guide produced that year right. How reliable are these general sites such as salarycom or Glassdoor? Some of these Well?

Scott Trumpholt:

not terribly. They are a good starting point. No-transcript, and oh my God, we could have a whole podcast about job titles in the UK.

Josh Matthews:

Well, that's I'd love to. We'll do that next.

Scott Trumpholt:

Okay, whether it's with me or someone else, because that's a really important aspect. But what I'm saying is they will say well, I'm a director, so I'm going to use the director and I got it within my field. It says finance director. So, first of all, they may be and this is a problem also when it comes to recruiting, which you know very well Someone might come to me and say the pay ranges aren't working and I'll start to look at the send me some of the candidates. The job is open is for a manager and the people understand that it's a manager's job. But all the people applying for it, for whatever reason, have been directors at other companies. They've had larger scope. Maybe they're wanting to downsize.

Scott Trumpholt:

But getting back to your market data question, part of the problem also is that it's not precise enough. For example, the sample size, if they even have it, could be very small, and that skews the data one way or the other. With my market data that I utilize, it's calibrated so that there are hundreds or thousands in there of incumbents in that job, which helps to level out the market data. The other thing is that the person on Glassdoor might be working at a very large company and someone at a smaller company will take that, oh, I've got the same job. I'm a software engineering director and take that as gospel.

Scott Trumpholt:

But different industries, different company sizes pay differently, the location of the organization as well. So there's all these different factors, like a soup you're throwing into a bowl to make the soup and they all need to be analyzed and so, while it's a good starting point, you have to look below the surface a little bit, and that's not something you can easily do for free online. At the very least, you're not going to even know what the sample size is. But if you do know the sample size, then I would challenge them to come forward and say okay, is this in your field? Is this in an industry that's comparable to what you're after? There's all these different factors. Compensation is not finance. It's very gray part art, part science. That's why it's part of human resources. You're dealing with people's livelihoods and you really have to make this kind of a connection based on a lot of different factors. It doesn't all add up nice at the end of the day. It's partly creative, but you've got to bring all these different pieces together to make a really good decision.

Josh Matthews:

Okay, let me ask you something about pay bans and what some companies are doing in this world of remote work, where they are adjusting the compensation based on your location. They are adjusting the compensation based on your location. So someone in San Francisco doing the same job is going to earn more than someone who's doing the same work in Kentucky, right yeah, do you feel that that's a fair practice, a justified practice, and what are some of the challenges with that?

Scott Trumpholt:

Yeah, I think it is fair. There's a lot of confusion there. Out there, a lot of people use the word cost of living and cost of labor interchangeably and they are two different things. Most companies use the cost of labor what it costs to bring in. It's not about the cost of living and inflationary factors and what the cost is of local grocery stores. There is a correlation in the sense that if you live in San Francisco, you have a very high cost of living and the cost of labor is higher than the national average significantly, but it doesn't match the cost of living. Okay, it's not the same thing. And so what?

Scott Trumpholt:

Typically, what I do is that I market, I build the pay structure based upon the United States national average and then some other factors that specifically relate to the company, company size, industry, things like that. But then what we do is we break it out into different segments by cost of labor. So I look at all the cities where the company may do business and then assign based on the cost of labor locally. So it is utilized. But one of the things that I do ask employers and company clients is regarding remote employees, where you don't have an office, is it necessary to have a local presence there or is this the employee's choice? They have the ability to work remotely, but sometimes, if it's a salesperson, you need a person in Decatur, georgia, instead of being in another part of Georgia Atlanta, georgia or Savannah Georgia. You need someone. But other times it's a remote IT person. So it's got to be based on business need. But again, just to clarify, it is legitimate to have these different amounts and I've worked with this with many, many different clients, where I have had one client that's in Manhattan, very high cost of labor, but they have other offices too, and then they make a decision as to whether or not there's a business need for that remote employee. Otherwise they're going to get paid based upon the business need.

Scott Trumpholt:

Some companies simply say to me no, no matter where they are, we're paying off where the corporate office is located. So the answer is it varies by client. But what I try and steer them towards is, first of all, it's not cost of living, it's cost of labor and I want them to understand the impact. If you have a number of employees case by case basis, and you need them in Wichita Kansas, case-by-case basis, and you need them in Wichita Kansas, you shouldn't need to pay the same as you're paying in New York City, and they get that. But there's again there's these different factors to be considered. Is there really a business need for them to be there, or is it just the employee's choice?

Josh Matthews:

And I think about the employee choice a lot. I've lived in Utah and San Francisco. Look, I live in Jupiter. I've lived in San Francisco. I've lived in a lot of fairly expensive places to live in, some sort of medium average places like Portland Oregon. There's a benefit that you get if you are living in a place that has a higher cost of living Not always, not 100% of the time, but I get the sunshine in the beach here. You know it's half a mile. Cost of living Not always, not 100% of the time, but I get the sunshine and the beach here. You know it's half a mile down the road. So that's a personal choice that I made and there should be a cost to that. If someone, if I'm, for instance, a remote employee for a company, there should be some sort of cost to that. It was my personal choice.

Josh Matthews:

Scott, you have been an absolute joy to have a conversation with this evening. Thank you so much for taking time out of your night to spend it here with me and with our listeners. Again, this is Salesforce Hiring Edge. We've been joined by Scott Trumpholt, t-r-u-m-p R? U M P O L T compensation expert. He can be found at HR compensation consultingcom If you type in Scott Trump Holt in LinkedIn, you know what, you should probably follow him. And, by the way, if you truly value your company, you want the best of the best. If you're the kind of company who invests in the right kind of software and invests in the right kind of employees, you may want to consider investing in having one of the best compensation structures that you could possibly invest in, and if that's the case, make sure you reach out to Scott. Thank you so much, scott. You are welcome back anytime.

Scott Trumpholt:

It's been my pleasure to be on the program with you today, Josh. Thank you.

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