What to Pay Your Employees

About this video

Dan Martell explains why fast-growing companies end up with employees demanding raises after receiving inflated titles. He says you do not pay a CEO $80,000 a year, and that someone who can actually lead and run a team is six figures. Founders often promote an assistant to Director of Operations or COO, or let someone become VP of Sales with no team, then that person Googles a payscale — in his example, $600,000 for a VP of Sales versus $120,000 they make — and feels underpaid. He shares a client who grew, in his telling, 300-400% for two to three years and accumulated inflated titles used to negotiate when cash went back into growth. His three fixes are: map roles and responsibilities against the real title to expose the gap and negotiate closing it over 16 months to two years; run a compensation audit with an expert, spreadsheet, location and payscale data; and do a role-mapping reset with a people plan for the future organization, deciding who to coach up, keep in place, or coach out, supported by a learning and development plan.

Key takeaways

• Do not trade inflated titles for low pay: a title like COO or VP implies responsibilities and experience the person may not yet have.
• Use a roles-and-responsibilities map to show the gap between current work and the titled role — he notes a COO would typically have at least 12 people reporting to them — and negotiate closing it over time.
• Run a formal compensation audit: put everyone in a spreadsheet with role, tenure, location and payscale benchmarks, and quantify how far pay is off.
• Build a people plan for the future state — e.g. triple the revenue — and create a learning and development plan with skills, books, training and mentorship for each person to grow into it.
• Hiring professionals costs more but brings playbooks and self-direction; honoring early employees does not mean they are the right person for the team today.

Episode details: published July 3, 2023 · 11:14 long. Summary written by Self Growth Videos from the episode itself. Business results and any income figures mentioned are Dan Martell’s own claims, shared for education — they are not typical or guaranteed.

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