No company intends to create pay inequities, but many do, unintentionally.
It’s not usually one big mistake. It’s a thousand small ones: assumptions, inconsistencies, exceptions, outdated practices, and unchecked manager discretion that add up to real pay gaps. Gaps that erode trust with employees and increase non-compliance risk.
Here are three flaws I see often:
1. Inconsistent Job Evaluation Practices
Job titles don’t always reflect the work being done. Job descriptions are outdated or overly generic. The market pricing process is not documented and followed consistently. Career levels are assigned based on gut feel instead of defined criteria. The result? Misaligned pay grades and base pay ranges as well as incentives. It is difficult to justify job evaluation decisions if you aren’t consistent every time. This work should be done by a few trained HR/Compensation team members.
2. Misuse of Market Data
Market data provides valuable insight into what other employers are paying, but it’s not flawless. Relying solely on job titles or years of experience when matching to survey benchmarks leads to inaccurate results. And paying employees too closely to the median (typically, the base salary range midpoint), without regard for differences in performance, internal equity, or relevant experience causes pay disparities instead of addressing them.
3. Manager Discretion Without Oversight
Pay decisions made by managers with no HR/Compensation review can quickly cause pay inequities. Manager bias (conscious or unconscious), fear of losing talent, or simply a lack of training can lead to unjustifiable pay decisions. Over time, small variations create large equity gaps that are difficult and expensive to fix.
So, how do you shift from fueling to fighting inequity?
Define Jobs and Levels Clearly
Use consistent, business-aligned job architecture and documented compensation processes. Evaluate jobs based on factors such as impact, scope, and complexity - not who’s in the job.
Apply Market Data Thoughtfully
Validate matches. Compare responsibilities, not just job titles. Use data to inform decisions, not dictate them blindly. Review the salary survey methodology, participating employers, and pay data summaries.
Implement Governance and Accountability
Train managers and executive leaders. Create standardized pay guidelines and follow them. Review pay decisions regularly for consistency. Pay equity isn’t a once-a-year analysis. It is a daily practice that needs to be monitored and assessed frequently.
Fair and equitable pay isn’t just an HR initiative. It’s a business imperative.
So, ask yourself: Are your compensation processes and decisions reinforcing equity or quietly eroding it?
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