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Unstructured pay decisions create inequity, attrition, and legal risk. This framework gives HR teams and leadership a complete, defensible compensation system from philosophy to implementation.
Covers: defining the compensation philosophy, job architecture and level definitions, market benchmarking methodology, building salary bands (min/midpoint/max), pay equity audit process, annual review cycle, and four detailed manager conversation scripts for common pay discussions. Designed to work alongside the Pay Transparency Policy.
FAQS
Q What is a pay band and how is it constructed?
A pay band is a defined salary range for a specific level and function, with a minimum, midpoint, and maximum. The minimum is typically set at the market P25 (25th percentile), the midpoint at P50 or P75 depending on competitive positioning, and the maximum at 120–130% of the midpoint. The guide walks through this construction in detail with worked examples and recommends specific market data sources for benchmarking.
Q How does this framework connect to the Pay Transparency Policy?
The Compensation Framework builds the bands; the Pay Transparency Policy governs how and when they are communicated — in job postings, to employees who ask, and proactively at offer and review time. The two documents form a complete compensation and transparency system and are designed to work together.
Q How does the pay equity audit work?
Seven steps: define comparator groups (by level and function, not job title), collect pay data, control for legitimate explanatory factors (tenure, performance, geographic adjustment), identify unexplained gaps, investigate causes, remediate (adjust pay), and report. A gap of 5% or more within a comparator group after controlling for legitimate factors triggers a mandatory joint pay assessment under the EU Pay Transparency Directive from June 2026.
Q What market data sources does the guide recommend?
Radford (AONHEWITT) for technology and life sciences, Mercer for broad industry coverage, Glassdoor and LinkedIn Salary Insights for candidate-facing benchmarks, and Levels.fyi for specialist technology roles. The guide explains how to weight different sources and how to build a composite benchmark when a single source has limited data for a specific role.
Unstructured pay decisions create inequity, attrition, and legal risk. This framework gives HR teams and leadership a complete, defensible compensation system from philosophy to implementation.
Covers: defining the compensation philosophy, job architecture and level definitions, market benchmarking methodology, building salary bands (min/midpoint/max), pay equity audit process, annual review cycle, and four detailed manager conversation scripts for common pay discussions. Designed to work alongside the Pay Transparency Policy.
FAQS
Q What is a pay band and how is it constructed?
A pay band is a defined salary range for a specific level and function, with a minimum, midpoint, and maximum. The minimum is typically set at the market P25 (25th percentile), the midpoint at P50 or P75 depending on competitive positioning, and the maximum at 120–130% of the midpoint. The guide walks through this construction in detail with worked examples and recommends specific market data sources for benchmarking.
Q How does this framework connect to the Pay Transparency Policy?
The Compensation Framework builds the bands; the Pay Transparency Policy governs how and when they are communicated — in job postings, to employees who ask, and proactively at offer and review time. The two documents form a complete compensation and transparency system and are designed to work together.
Q How does the pay equity audit work?
Seven steps: define comparator groups (by level and function, not job title), collect pay data, control for legitimate explanatory factors (tenure, performance, geographic adjustment), identify unexplained gaps, investigate causes, remediate (adjust pay), and report. A gap of 5% or more within a comparator group after controlling for legitimate factors triggers a mandatory joint pay assessment under the EU Pay Transparency Directive from June 2026.
Q What market data sources does the guide recommend?
Radford (AONHEWITT) for technology and life sciences, Mercer for broad industry coverage, Glassdoor and LinkedIn Salary Insights for candidate-facing benchmarks, and Levels.fyi for specialist technology roles. The guide explains how to weight different sources and how to build a composite benchmark when a single source has limited data for a specific role.
