Step 1 – Determine area(s) of focus. Pay compression is when the pay of an employee is very close to or above (a) the pay of more experienced and higher performing employees in the same job title or (b) their first level supervisor.

· Example: We pay our supervisors at least 10% above their highest paid direct report. Exceptions are made for the following reasons: insert text.

Step 2 – Determine the executive summary needed at the completion of the analysis.

Step 3 – Determine the fields needed in an Excel file to do the analysis. Pull the Excel data from your HRIS.

Step 4 – Do the pay compression analysis needed to fill in the executive summary. Include a written list of observations, recommendations, and budget impact overall and by ELT member’s name.

Step 5 - Additional Considerations:

· How did you end up in this situation (root causes) given the pay compression found in the analysis?

· What is needed to ensure this pay compression doesn’t happen in the future?

· Do you need to establish minimum base salary as starting pay rates for certain supervisor job titles? Do you need a max for certain job titles? How does this impact the base pay range (pay grade) assigned to the jobs?

· Who do you need to show this pay compression analysis to? CHRO, HRBPs, Comp, TA, ELT, etc. What is your ask of them?

· How often do you recommend this pay compression analysis be done in the future? 1 x a year, after merit increases are planned but before they are implemented, etc.

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