Note: Multiple budgets (as described below) are now available for customers. Contact your Customer Success Manager if you want to learn more.
A budget is the amount of cash and/or equity that a company’s compensation team allocates during a performance cycle. At a high level, the value of setting up a budget is simple; It helps a company be intentional about how much they spend during a compensation cycle. Tactically, a budget creates guardrails for managers to make fair and efficient compensation decisions: Instead of asking managers to come up with their proposed comp changes themselves, budgets give them a set amount of resources to distribute across their teams.
Where to find budgets
Budgets are visible at the top of the Compensation Planning tab for your active cycle (see screenshot below).
Everyone’s view of these budgets will vary based on their role. For example, an admin who has the authority to view all employees will see the entire company’s budgets, while a front line manager who only has the authority to view their direct reports will see their direct reports’ budgets.
Setting up a budget
Today, budgets are set up with your account team. There are three steps to setting budgets up with your team.
1. Decide the type of budget you want to create
Pave supports both cash and equity budgets. Companies typically have distinct budget types for both cash and equity (i.e. a merit cash budget, a market adjustment cash budget, an equity refresher grants budget). The product supports the following budget types:
Cash budget types: salary raise, variable raise, market raise, promotion raise, one time bonus, and annual bonus
Equity budget types: refresher grant, promotion grant, and performance grant
2. Create budget amounts
In Pave, the product supports setting budgets at the employee level (vs. the company level). Pave offers three different ways to generate budgets
Create budgets from your company’s recommendation logic (most popular)
Example: a company’s recommendation logic says that employees who “greatly exceed expectations” get a 10% increase, those who “exceed expectations” get an 8% increase, and those who “meets expectations” get a 5% increase. The budget for salary raises will match these recommendations.
Create budgets as a % of compensation
Example: a company decides to allocate funds of 3% an employee to cover recent inflation in the US as part of a market raise budget. This gives managers the ability to allocate this market budget across eligible employees.
Create a custom budget amount per employee
Example: a company decides that they want to award equity spot bonuses to high potential employees at the company. They want to be able to provide custom grant amounts to this subset of employees, so they choose to use a custom budget.
3. Decide how you want to visualize & name your budgets in the UI
Customers can decide what budgets they want to make visible and what they are named in the Compensation Planning UI. There is the option to visualize every discrete budget, or to create composite budgets where several budgets are visualized together.
Below is an example of one composite budget - Cash Budget Total - and the three discrete budgets that make up this Cash Budget (Salary, Spot Cash, Variable Cash).
The number of budgets you see in this UI will depend on how many your company sets up.