6 Compensation Strategy Examples from Leading Companies

A company’s approach to compensation shapes everything from talent attraction to long-term employee satisfaction. Get it right, and you build a workforce that feels valued and motivated. Get it wrong, and you risk losing great people to competitors.

Striking the right balance means considering market competitiveness, internal fairness, and business sustainability while ensuring employees understand the decision-making behind your pay calculations.

This article explores six examples of a compensation strategy from real-world companies. It highlights key takeaways from each organization you can use to build a compensation strategy that’s meaningful to you.

1. Google’s compensation strategy: "Pay unfairly"

Google adopts a compensation philosophy that recognizes the outsized impact of top performers, compensating them significantly more than average employees.

But it wasn’t always this way. In “Work Rules!: Insights from Inside Google That Will Transform How You Live and Lead” by Laszlo Bock, the former Senior Vice President of People Operations explains the evolution of compensation at Google:

Key compensation elements at Google

• Competitive base salaries: Now, Google offers industry-leading base salaries. Leaked data verified by Business Insider reveals that some software engineers earned up to $718,000 per year in 2022. It’s reasonable to assume these salaries have increased further since then.
• Performance-based bonuses: Employees are eligible for bonuses that reward exceptional performance, along with equity refresh opportunities.
• Comprehensive benefits: The company also offers extensive benefits, including health insurance, retirement plans with significant 401(k) matching, 1:1 financial coaching, and various wellness programs.
• Pay equity initiatives: Google conducts an annual cross-company pay equity analysis and makes adjustments as required.

Key takeaways from Google

Google has been on a journey with its compensation philosophy. The fact that it’s one of the most sought-after employers in the world has given it the flexibility to experiment with pay structures, prioritize long-term incentives, and maintain a strong talent pipeline. Here are the main pillars of its “Pay Unfairly” strategy:

• Investing heavily in top talent: Google can afford to offer market-leading salaries and stock options to attract and retain the best people in tech. Its ability to pay significantly more than competitors enables it to secure top-tier engineers, AI researchers, and executives.
• Emphasizing long-term value over short-term gains: By offering generous stock grants (restricted stock units or RSUs) and performance-based bonuses, Google encourages employees to stay and contribute over the long haul, aligning their success with the company’s growth.
• Committing to pay equity and transparency: Regular audits of its compensation data address disparities and minimize any gender and racial pay gaps. This step helps Google maintain its reputation as a progressive employer.
• Using perks and benefits to strengthen employer appeal: While compensation is critical, Google’s extensive perks add significant value beyond salary.

2. Amazon’s compensation strategy: Rewarding excellence while cutting costs

Amazon has restructured its compensation structure in 2025 to reward 1% of the company’s people while reducing pay for most other employees. This move is part of a broader cost-cutting strategy as Amazon continues to streamline operations and restructure its workforce.

The company has undergone massive layoffs, slashing 27,000 corporate jobs in 2023 and another 2,100 positions in early 2025, with further reductions in middle management expected this year. Against this backdrop, Amazon has reshaped its compensation model to increase differentiation between top performers and the rest of its workforce.

Tanisha Scottham, a Tier 3 Process Assistant at Amazon, commented on the recent decision:

Key compensation elements at Amazon

• High pay for top performers: The highest-rated employees comprise 1% of the organization. They now earn 105-110% of their target compensation, up from 100%.
• Pay drops for most employees: Mid-tier performers earn 90% of their target pay (down from 100%), with lower-tier employees earning 70% (down from 80%).
• Promotion pathways: Promotions from L6 and above are becoming less frequent.

Key takeaways from Amazon

Amazon’s latest compensation shifts are designed to reward top talent, reduce costs, and align pay with performance metrics. However, they also invite significant risks, particularly in terms of employee retention and morale.

• Prioritizing top performers: The new model increases pay differentiation, ensuring only the highest-rated employees see financial gains.
• Limiting career growth: Ambitious employees blocked from progressing beyond L6 could look for external opportunities.
• Promoting a culture of high-stakes performance: Amazon’s shift reinforces its “deliver results” ethos, but it may also increase burnout and internal competition.

3. Basecamp’s compensation strategy: Equal pay for equal work

Basecamp, a project management tool delivered by 37Signals, adopts a transparent and standardized compensation philosophy, ensuring all employees in the same role and level receive identical pay, regardless of their global location.

However, employees can be assured of a fair approach across the entire organization.

Key compensation elements at Basecamp

• Standardized salaries: Basecamp pays employees equally, without negotiations. Salaries are benchmarked annually against the San Francisco market, targeting the 90th percentile, irrespective of the employee’s location. So, if you work in HR, computer programming, or content marketing, you’ll earn within the top 10% for your position, regardless of where you live or work.
• Profit sharing: At the end of the fiscal year, the company shares 10% of its annual profits with employees, distributed based on tenure. Employees receive an invitation to participate in profit sharing after completing two years with the company.
• Comprehensive benefits: Basecamp offers extensive benefits, including health insurance, retirement plans with a 6% salary match, paid time off, and a 4-day workweek during the summer months.

Key takeaways from Basecamp

37Signal’s commitment to equal pay for equal work, combined with its comprehensive benefits and profit-sharing initiatives, cultivates a fair and motivating work environment that appeals to a diverse and talented workforce. The following points strengthen its approach:

• Promoting fairness through transparency: Implementing a no-negotiation, standardized pay structure creates equitable compensation and reduces employee disparities.
• Attracting and retaining talent: 90th percentile benchmarking at the San Francisco market ensures highly competitive compensation, attracting top-tier global talent and allowing employees to live where they choose without financial penalty.

4. Gitlab’s compensation strategy: Location factor transparency

GitLab takes a market-based approach to compensation, aligning salaries with local labor rates rather than the cost of living. This ensures pay remains competitive within each region while maintaining transparency using a public compensation calculator.

As a fully remote company, GitLab’s approach allows it to attract global talent with its fair and sustainable pay structures. Sid Sijbrandij, GitLab’s CEO, explains the rationale behind this approach:

Key compensation elements at GitLab

• Market-based compensation: Salaries are benchmarked to local labor markets rather than the cost of living in a specific area.
• Public compensation calculator: Employees and candidates can access GitLab’s compensation calculator to see how salaries are determined based on role, location, and experience. This tool ensures transparency in pay decisions and eliminates the need for negotiation conversations.
• Stock and performance-based compensation: Most employees are eligible for Restricted Stock Units (RSUs) as part of their total compensation package. Salary increases within market salary bands are performance-driven, and promotions align with market rates for the new role.

Key takeaways from GitLab

GitLab’s approach to compensation is built for a fully remote, global workforce, ensuring fair pay while keeping costs sustainable. Its model is based on:

• Scaling compensation for a global workforce: Paying local market rates instead of a flat global salary allows GitLab to hire talent from anywhere without creating pay disparities or budget issues.
• Ensuring pay reflects real market value: Compensation isn’t locked in once you’re hired. GitLab regularly reviews salaries against market trends, adjusting pay to stay competitive and prevent wage stagnation.
• Rewarding impact over tenure: Raises and stock grants aren’t automatic, which keeps top performers engaged and ensures compensation reflects actual contributions rather than just time treading water at the company.

5. Checkly’s compensation strategy: Transparent pay calculator

Checkly also follows a transparent approach to compensation, making its pay formula publicly available through an open-source pay calculator. Unlike many companies where salary decisions are opaque and subject to negotiation, Checkly removes the guesswork by defining a clear, formula-driven structure for how pay is determined.

Key compensation elements at Checkly

• Open-source pay calculator: Checkly’s calculator reveals how salaries are computed based on role, seniority, performance evaluations, and location.
• Formula-based compensation: The company calculates its base pay using a structured formula to ensure consistency in pay decisions and limit subjectivity and negotiation-based disparities. The formula is “Base Pay = Role x Seniority x Performance x Location.”
• Market-driven salary benchmarking: Salaries are benchmarked against London market rates as Checkly found Berlin rates weren’t reflective of VC-backed tech startups.
• Location factor adjustments: Instead of paying global or fully localized salaries, Checkly groups regions into four tiers based on cost-of-living data. Employees in lower-cost regions (e.g., Argentina, Poland, and Spain) receive 90% of the benchmark rate, while high-cost locations (e.g., NYC or Boston) get 150%.

Key takeaways from Checkly

Checkly’s compensation model eliminates uncertainty, promotes fairness, and ensures structured career growth by:

• Removing ambiguity in pay decisions: A fully transparent pay formula shows employees and candidates how salaries are set and how they can grow financially.
• Balancing market competitiveness with sustainability: Using London as the benchmark city while applying location multipliers allows Checkly to attract global talent while keeping pay fair across different regions.
• Rewarding both career progression and performance: Employees can earn salary increases based on performance even without a promotion, ensuring growth opportunities within a role.

6. PostHog’s compensation strategy: Simplified global compensation

PostHog’s compensation model is designed to make every employee feel truly invested in the company’s success. Instead of just offering competitive salaries, PostHog prioritizes equity ownership for all employees so they can share in the company’s financial growth.

PostHog has also streamlined its global HR operations by partnering with Deel, allowing it to hire, pay, and manage employees across multiple countries efficiently. This move has eliminated many complexities associated with international payroll, compliance, and benefits administration, helping PostHog scale quickly and remain competitive in the global talent market.

Key compensation elements at PostHog

• Equity for every employee: Share options are available with a 1-year cliff and a 4-year vesting schedule. PostHog has team-friendly terms: employees who leave have 10 years to exercise their options (which is more generous than the industry-standard 90-day window.)
• Flexible pay structure and tax considerations: UK employees benefit from EMI share options, a tax-advantaged scheme. In the US, share options are structured as Incentive Stock Options (ISOs) to minimize tax burdens.
• Seniority based on skills, not titles: PostHog avoids traditional corporate hierarchies, valuing seniority based on impact and efficiency, rather than tenure.

Key takeaways from PostHog

PostHog’s straightforward compensation strategy encourages long-term employee investment by:

• Empowering employees through ownership: Share options are a core part of every employee’s compensation, offering long-term financial upside and a direct stake in the company’s growth.
• Paying for skills, not hierarchy: Compensation increases are earned through experience, efficiency, and decision-making rather than years in a role or a title change.
• Creating a globally scalable pay structure: By outsourcing international hiring and payroll to Deel, PostHog has eliminated compliance headaches, allowing them to hire the best talent regardless of location.

5 best practices in effective compensation

The companies we’ve explored each take a unique approach to compensation. Still, some clear patterns emerge when we take a magnifying glass to them:

Prioritizing transparency

The best compensation strategies remove ambiguity. Companies like Checkly and GitLab openly share their pay structures, so employees and candidates understand exactly how salaries are determined. Removing secret negotiations and clarifying pay calculations allows businesses to increase trust and attract talent who value fairness.

Recognizing and rewarding high performance

While transparency is important, rewarding impact remains crucial. Google takes this to the extreme by paying top performers significantly more than their peers. At the same time, Amazon’s model also ensures only the best employees see significant financial gains. Meanwhile, PostHog ties pay increases to skill and contribution rather than tenure, reinforcing a performance-driven culture.

Standardizing pay to promote fairness

Basecamp and GitLab achieve pay equity by standardizing salaries rather than relying on negotiation. Basecamp eliminates salary discrepancies by paying all employees in the same role and level equally. In contrast, GitLab benchmarks pay to local labor markets. In either case, these approaches prevent bias and close wage gaps, allowing companies to focus on talent rather than salary discussions.

Reviewing and updating compensation structure regularly

Markets change, and so should pay structures. Google, Checkly, and GitLab routinely reassess their salary benchmarks to stay competitive. Regular reviews ensure pay remains fair, reflective of market trends, and aligned with business goals — whether that means raising salaries, adjusting equity grants, or refining location-based pay adjustments.

Leaning on technology to simplify compensation management

Handling payroll, benefits, and compliance for global teams can get complicated fast. Companies like PostHog have already streamlined this process by leveraging Deel to manage its payroll and hiring. Automating and centralizing these processes allows companies to save time, reduce errors, and scale globally without major administrative burdens.

Manage compensation and payroll with Deel

Building an effective compensation strategy requires the right tools, whether for a local team or a global workforce. Deel simplifies the process with a comprehensive workforce management solution suite that allows companies to stay competitive, fair, and compliant. These tools include:

• Salary insights: Access Deel’s in-platform salary data to compare compensation across roles, industries, and regions. Use real-time insights to stay competitive and set fair pay structures for both new hires and existing employees
• Compensation management: Manage pay structures, salary bands, and equity programs in one place. Deel’s tools take the guesswork out of compensation planning, making it easier to scale and adjust pay strategies as your business grows
• Pay-for-performance models: Deel Engage allows you to link performance metrics to salary bands, ensuring top performers are recognized and rewarded fairly. This reinforces a merit-driven culture while maintaining consistency in compensation
• Global payroll: Deel’s automated payroll system enables companies to pay employees and contractors across multiple countries while staying compliant with local tax laws, benefits requirements, and labor regulations

Deel provides the data, structure, and automation to build a scalable, fair, and efficient pay strategy. Ready to transform how your company manages compensation? Book a free Deel demo today.