Compensation and leveling
Compensation touches employment law, pay transparency requirements, and equal pay obligations that
vary by jurisdiction. Structural work here is fine; specific decisions about individuals should be
reviewed by qualified counsel or an HR professional.
Leveling first
Pay structure without a leveling framework produces negotiated salaries, and negotiated salaries
produce inequity that correlates with who negotiates hardest.
Define each level by scope and impact, not tenure or task list:
- What ambiguity can they handle — a defined task, a defined problem, an undefined problem, a
problem nobody has identified?
- What is the blast radius of their decisions — their work, their team, the function, the company?
- What do they do for others: execute, contribute, guide, or set direction?
Levels must be distinguishable in a sentence. If two adjacent levels cannot be told apart by
someone who does not know the people in them, they are one level.
Bands
For each level, benchmark against a market defined by the roles you actually compete with for
candidates — not the whole industry, and not aspirational peers.
- Set a target position (at market, above, or below) and state it as policy rather than deciding
case by case.
- Bands wide enough to allow growth within a level, narrow enough to mean something.
- Re-benchmark on a schedule. Markets move, and bands that do not move create compression that
eventually costs more to fix than to prevent.
Compression and equity
Compression — new hires paid near or above tenured staff — is the predictable result of moving
markets and static internal pay. It is corrosive because it is discovered, and it is always
discovered.
Run a pay equity analysis on a schedule: pay by level, controlling for level and location,
disaggregated by demographic. Where a gap exists, fix it directly rather than waiting for the next
cycle. Findings here need qualified review before action.
Decisions
- Raises for sustained performance at level, promotions for sustained performance at the next
level. A promotion is recognition that someone is already operating there, not a bet that they
will.
- Counteroffers rarely work and reset expectations for everyone who observes them. Where a
counteroffer is right, it should reflect a correction you should have already made.
- Every exception is a precedent. Document the reasoning, because you will be asked to repeat it.
Never
- Set an individual's pay before their level is settled.
- Use a candidate's prior salary as an input. It is prohibited in a number of jurisdictions and it
imports someone else's inequity.
- Discuss an individual's compensation in a forum where their level has not been calibrated.
1---2name: compensation-and-leveling3description: Builds and maintains the leveling framework and pay structure — level definitions, salary bands, benchmarking, pay equity, and how raises and promotions are decided. Use this to design or revise leveling, set or adjust salary bands, benchmark against market, handle a compensation request or counteroffer, run a review cycle, or diagnose pay compression and equity issues.4---5
6# Compensation and leveling
7
8> Compensation touches employment law, pay transparency requirements, and equal pay obligations that
9> vary by jurisdiction. Structural work here is fine; specific decisions about individuals should be
10> reviewed by qualified counsel or an HR professional.
11
12## Leveling first
13
14Pay structure without a leveling framework produces negotiated salaries, and negotiated salaries
15produce inequity that correlates with who negotiates hardest.
16
17Define each level by **scope and impact**, not tenure or task list:
18
19- What ambiguity can they handle — a defined task, a defined problem, an undefined problem, a
20 problem nobody has identified?
21- What is the blast radius of their decisions — their work, their team, the function, the company?
22- What do they do for others: execute, contribute, guide, or set direction?
23
24Levels must be distinguishable in a sentence. If two adjacent levels cannot be told apart by
25someone who does not know the people in them, they are one level.
26
27## Bands
28
29For each level, benchmark against a market defined by the roles you actually compete with for
30candidates — not the whole industry, and not aspirational peers.
31
32- Set a target position (at market, above, or below) and state it as policy rather than deciding
33 case by case.
34- Bands wide enough to allow growth within a level, narrow enough to mean something.
35- Re-benchmark on a schedule. Markets move, and bands that do not move create compression that
36 eventually costs more to fix than to prevent.
37
38## Compression and equity
39
40Compression — new hires paid near or above tenured staff — is the predictable result of moving
41markets and static internal pay. It is corrosive because it is discovered, and it is always
42discovered.
43
44Run a pay equity analysis on a schedule: pay by level, controlling for level and location,
45disaggregated by demographic. Where a gap exists, fix it directly rather than waiting for the next
46cycle. Findings here need qualified review before action.
47
48## Decisions
49
50- **Raises for sustained performance at level**, promotions for sustained performance at the next
51 level. A promotion is recognition that someone is already operating there, not a bet that they
52 will.
53- **Counteroffers rarely work** and reset expectations for everyone who observes them. Where a
54 counteroffer is right, it should reflect a correction you should have already made.
55- Every exception is a precedent. Document the reasoning, because you will be asked to repeat it.
56
57## Never
58
59- Set an individual's pay before their level is settled.
60- Use a candidate's prior salary as an input. It is prohibited in a number of jurisdictions and it
61 imports someone else's inequity.
62- Discuss an individual's compensation in a forum where their level has not been calibrated.
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