algo-hr-compensation
Compensation Benchmarking
Overview
Compensation benchmarking compares internal pay levels against external market data to assess competitiveness. Uses compa-ratio (actual pay / market midpoint) and percentile positioning. Informs salary band design, pay adjustments, and equity analysis.
When to Use
Trigger conditions:
- Evaluating whether current salaries are competitive with the market
- Designing or updating salary bands and pay structures
- Identifying pay equity gaps across demographics or roles
When NOT to use:
- For individual performance-based pay decisions (use performance management)
- When no market data is available (need at least survey benchmarks)
Algorithm
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