Establishing a solid foundation is essential when introducing pay transparency. A well-designed compensation policy is a critical component, ensuring fairness and consistency while allowing flexibility to adapt to the company’s growth and changing performance. Key considerations include whether the compensation framework aligns with organizational values, whether it is clearly defined and easily communicated, and how pay adjustments will be managed as the business evolves. By addressing these factors, companies can build a transparent and scalable pay structure that supports long-term growth.
The ultimate guide
This guide helps HR experts structure a comprehensive compensation policy by asking the right questions to address key areas such as fairness, transparency, and competitiveness.
1. Compensation Philosophy
- What core values (e.g., fairness, transparency, market competitiveness) guide our compensation?
- How does the compensation strategy support company goals?
- For whom is this policy for? (employees, subcontractors, employees employed via an EOR?)
2. Salary Structure and Levels
- How will we define salary bands (e.g., role impact, experience, market data)?
- Will salaries be adjusted based on location?
3. Equity and Benefits
- What role does equity play in total compensation?
- What benefits will we offer beyond salary (e.g., health insurance, flexible leave)?
- How do you ensure consistency across locations?
4. Performance and Salary Reviews
- How often will performance and salary reviews take place?
- Will pay increases be tied to individual performance or broader company success?
5. Global and Remote Compensation
- How do we ensure fair compensation for employees in different regions?
- Will we adjust salaries based on geographic location or remote status?
6. Transparency and Communication
- How will compensation decisions be communicated to employees?
- Will pay transparency be part of our culture, and how can we implement it effectively?
7. Sustainability and Market Competitiveness
- How do we ensure that compensation aligns with the company’s financial sustainability?
- How will we benchmark our pay against the market to remain competitive?
This guide serves as a foundational tool for HR experts to develop a comprehensive, transparent, and fair compensation policy that aligns with organizational goals and employee expectations.
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See how leading companies (such as Hubspot or Gitlab) around the world are implementing pay transparency. Access our exclusive collection of real-life compensation policies to gain insights and inspiration for your own approach.