Pay compression is when there is little difference in pay between employees regardless of differences in their education, training, knowledge, experience, performance, skills, or abilities.

There are two types of pay compression. The first is when a new hire is paid closely to a tenured employee. And the second is when there is a small difference between a manager and a direct report.

What causes pay compression?

Minimum wage increases
The external market pushes starting salaries higher.
Inconsistent pay practices over time

Gone are the days when employers could hide this. The pay transparency and pay equity laws are shining a spotlight on this problem.

If you are in a HR or Compensation leadership role and you know that you need to do a pay compression analysis and it just never seems to rise to the top of your priorities, we should talk.

My team and I do this type of analysis frequently and can get it done typically within 1 - 2 weeks.

And if you are an employee who is aware that your pay isn’t in alignment with your contributions, send me a DM. My passion is helping employees get paid what they are worth.

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