The Evolving Three-Legged Stool: Reflections on Modern Compensation Realities

Written By Zhang Train

So I was reading Charlie Franklin's post the other day, and it inspired me to write about the “three-legged stool” problem he mentioned: “Comp strategy is a three-legged stool between competitiveness, cost, and fairness”.

Some of us have heard of the "three-legged stool" metaphor before. Nothing new there. But what IS new is everything happening around that stool. The whole world of compensation has been turned upside down.

Remote work blew geographic pay norms wide open. Those transparency laws and sites like Levels.fyi mean employees now know what everyone else is making. And let's be real—younger workers today simply expect more transparency and fairness than previous generations did.

The stool isn't just supposed to balance anymore—it's expected to do backflips while juggling flaming torches.

Being Competitive Is No Longer Just About Numbers

It's not enough to just match what other companies are paying. With talent able to compare offers across different cities and industries, you need to stand out.

Today's job candidates come armed with data and a clear sense of their worth. They're not just hoping for a good offer—they're expecting one. This means:

  • You need fresh market data, not some survey from two years ago

  • Clear salary bands that show people how they can grow

  • Better ways to explain the full package—cash, equity, benefits, the works

And roles have changed too. Software engineers working at a bank now expect the same pay as engineers at tech companies. Salespeople want comp plans that actually reflect how they deliver value. And if you're hiring for AI or data science roles? Get ready to pay up—those folks know they're in demand.

Bottom line: What counts as "competitive" isn't fixed. It depends on who you're trying to hire and what makes your company worth joining.

On Costs: Yeah, Money Matters

Budgets are real. Cash burn is real. But treating comp as just another expense to minimize is short-sighted and eventually leads to losing your best people.

The challenge isn't to be cheap—it's to be smart about where you spend. Especially for startups and growing companies, how you allocate your comp budget is a strategic decision:

  • Which roles truly drive results? Pay those people well.

  • How can you use equity meaningfully without giving away the farm?

  • What happens to your budget when everyone gets promoted or needs refresher grants?

The questions leaders should be asking aren't just "How do we spend less?" but "Are we spending on the right things and the right people?"

Fairness: Not Just a Nice-to-Have

Let's get straight to it: fairness builds trust, and without trust, teams fall apart. This isn't some fluffy HR concept—it's the glue that holds organizations together.

What does actual fairness look like?

  • Levels that make sense and that people understand

  • Pay ranges that don't mysteriously change when certain candidates show up

  • Consistent processes for offers and promotions

  • Transparency about how decisions get made

And we can't ignore the equity issues anymore. Pay gaps based on gender, race, or location are real problems that require real solutions:

  • Regular audits to see where the problems are

  • Actually fixing issues when you find them, not just acknowledging them

  • Teaching managers how to have honest conversations about pay

Fair pay is hard to get right, but you can't just opt out of trying anymore.

Time for a Reality Check

Too many companies are still using compensation approaches from 2010. That doesn't work in 2025.

Modern comp needs to account for:

  • People working from anywhere and everywhere

  • Laws requiring more transparency

  • Global talent pools

  • Employees who expect personalization

  • Investors who expect financial discipline

If your compensation approach isn't evolving with these changes, you're falling behind. And that shows up as problems with morale, hiring, managers giving inconsistent messages, and eventually, people leaving.

The companies getting this right don't treat compensation as a bunch of disconnected decisions. They have a philosophy that guides everything. They build systems intentionally. They make sure everyone in leadership understands and follows those systems. And they're willing to adapt when things change.

My hope is that I can help companies get there with Octave Comp. I aspire to work with early, growth-stage, or late stages companies to design compensation systems that actually make sense in today's world. I’m talking practical stuff:

  • Creating leveling frameworks that fit the company (vs using one size fits all)

  • Building salary bands and equity guidelines that can keep pace with the market

  • Helping managers have really effective compensation conversations with their teams

  • Making the whole process scalable as the company grows

Does this resonate with you? Book a free intro call and let’s see how Octave Comp can help!





Zhang Train