Situation
As with most companies during a shifting economic climate, a professional services firm encountered a critical survival challenge: balancing financial sustainability with top talent retention while also keeping the business resilient and adaptable. Their traditional compensation model (automatic biannual raises, ad-hoc salary increases, unbenchmarked and inconsistent job offers, and a discretionary bonus structure) was locking the company into unsustainable cost trajectories. At the same time, high-performing employees were frustrated that their efforts weren’t being recognized proportionally. Ad-hoc raises and unbenchmarked job offers created inconsistencies that undermined fairness, eroded trust, and in some cases locked the company into unsustainable salary commitments. New hires often received offers out of sync with existing staff, sparking internal equity concerns and straining retention of top performers. Leadership knew they needed a system that adapted to market pressures, motivated the team in both good and challenging times, and created a stronger sense of ownership across the company.
Solution
The point of this framework is agility: anchoring decisions around what leadership can control, influence, and modify, and applying proactive rather than reactive governance to those levers. Proxxy guided the client to adopt this mindset across compensation, client economics, and staffing so that discipline and flexibility worked hand in hand.
Proxxy partnered with the CEO and leadership team to design and implement a new strategic compensation framework that aligned pay with performance, sustainability, and long-term growth.
The first move was to replace automatic biannual raises with performance-based year-end adjustments tied directly to company financials. This ensured raises were sustainable and only committed once the firm’s results had stabilized and been validated. In parallel, Proxxy guided the establishment of salary bands for every role. Even without public disclosure, employees gained trust in knowing a structured, consistent method was being used for new hire offers and salary increases. To maintain competitiveness, these bands are benchmarked against market data on a regular basis.
Proxxy then helped reimagine the bonus structure. The firm introduced quarterly and project-based incentives that rewarded specific, measurable outcomes tied to revenue, margin, and client satisfaction. This kept motivation high throughout the year, ensured accountability, and tied short-term wins to long-term goals.
Beyond pay mechanics, Proxxy guided the leadership team to examine client economics through a compensation lens. We worked together to measure the true cost of acquisition, including client onboarding, sales cycles, and cross-functional involvement against the cost of client retention. This led to clear tolerance levels for low-margin accounts and a framework for letting go of unprofitable ones. By centering compensation around lifetime value (LTV), employees were incentivized to nurture high-value accounts rather than chase unsustainable volume.
Resource planning also came under review. Proxxy helped the firm implement a mixed-labor staffing model, backfilling entry-level roles offshore while preserving strong onshore leadership. This approach freed up a budget for competitive pay and incentive structures at higher levels, while maintaining delivery excellence.
Finally, Proxxy refined their shared ownership layer into the compensation framework. This included profit-sharing bonus pools, team-wide incentives tied to upsells and additional revenue opportunities, and equity pathways for leadership team members. These structures ensured everyone felt they were rowing the boat together, fostering alignment and loyalty across the organization.
Outcome
Within the first year, the firm reported a measurable shift in both financial outcomes and team culture. Compensation costs became more closely aligned with performance, protecting margins while rewarding impact. By eliminating ad-hoc raises and also unbenchmarked offers, salary growth stabilized and internal equity was restored, rebuilding employee trust in the fairness of the system. Quarterly incentives kept employees engaged, and retention of top talent improved as high performers saw direct recognition of their contributions. Recruiting also strengthened, with new hires noting the clarity and fairness of the structured salary banding process.
The firm avoided locking in premature cost commitments, achieved stronger alignment between client economics and compensation, and created a shared sense of ownership that motivated the team through both highs and lows. With Proxxy’s support, the CEO not only stabilized compensation practices but also built a system that adapted to the economy, attracted and retained top talent, and fostered accountability and resilience throughout the business. Most importantly, the framework proved agile – anchored on what the firm could control, influence, and modify – so that governance stays proactive rather than reactive. This agility positioned the company to withstand future shifts with confidence.
