Compensation Band Review
Compensation review memo with band recommendations, per-employee corrections, pay-equity findings. Approved changes implemented. Affected employees notified.
Before you start
- Existing compensation philosophy and bands
- Market data sources (Radford, Pave, Levels.fyi, market surveys)
- Annual review cadence with leadership approval
- Current bands per role and level
- Current employee compensation data
- Market benchmark data
- Internal pay-equity audit results
The steps
- Pull market benchmarks per role and level — Source: Radford, Pave, or industry-specific surveys. Pull: 50th and 75th percentile by role, level, geography, company stage. Multiple sources reduce single-source bias.
- Compare current bands to market — For each band: where does the midpoint fall in the market? At target percentile (e.g., 60th)? Lagging? Above? Document the delta for every band.
- Review current employee placement in bands — For each employee: where in the band are they (compa-ratio)? Compare to tenure and performance. Outliers (well above or below band) need investigation.
- Run a pay-equity audit — Compare compensation across protected classes for similar roles. Flag any gaps that aren't explained by tenure or performance. Pay equity is legal compliance and a culture commitment — non-negotiable.
- Recommend band adjustments — Where bands lag market significantly, propose adjustments. Cost the changes. Decide which roles to adjust this cycle vs phase. Bands are usually adjusted annually unless specific roles need urgent action.
- Identify per-employee corrections — For employees significantly under-banded with strong performance, propose corrections. Off-cycle adjustments may be needed before the regular review cycle. Surface to manager and leadership.
- Compile the comp review memo — Format: market data summary, band changes proposed, cost of changes, pay equity findings, off-cycle adjustments needed. Distribute to: CEO, CFO, CHRO, leadership team.
- Implement approved changes — Once approved, implement: updated bands, employee adjustments, communication to those receiving adjustments. Don't bundle comp news with bad news; comp deserves its own conversation.
If it goes wrong
Pay equity gap discovered but not addressed promptly
Hard rule: pay equity gaps fixed within 60 days of discovery, regardless of budget cycle. Legal exposure is greater than the cost of fixing.
Top performers leave because comp lagged market
Annual band review isn't enough for fast-moving roles (engineering, AI). Twice-yearly micro-adjustments for hot roles.
Comp changes communicated badly, employees feel undervalued
Lead with appreciation, then the change, then the why. Comp conversations require care — botched delivery damages even good news.
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