Fair compensation is a key factor in every organization across every industry. All workers deserve to be paid fairly according to their performance, experience and job requirements. Let’s discuss five steps that you can take to implement fair compensation at your workplace.

What is Fair Compensation?

Being compensated fairly is crucial for every worker. That’s why 63 percent of workers who quit their jobs in 2021 cited low pay as the reason for leaving.

It is important to note that fair compensation is not implementing the same pay rate across a company — rather, it is ensuring that all workers are paid fairly based on their experience, performance and job responsibilities. 

It is understood that not every job position is going to have the same value at a company, and some workers will be paid more due to the nature of their roles. But this is all part of fair compensation — as long as a pay rate is determined by focusing on the factors mentioned above.

Companies across the globe have been reprimanded for basing compensation on demographics such as gender, age, race and ethnicity, as this is where the compensation gap becomes extremely unfair. Those demographics do not indicate the value of an employee and should never be used to determine a pay rate.

Developing a Fair Compensation Plan

In order to avoid an unfair pay gap in your workplace, it’s important to develop a fair compensation plan. This plan will touch on all aspects of your compensation funds and how you can allocate them fairly to all workers. 

Let’s go over the five steps in developing this plan.

Step 1. Create an Outline

Implementing fair compensation across the workplace is easier said than done, and that’s why outlining some objectives and targets is key. The outline should include: 

  • Key responsibilities for every job position and the value of those responsibilities 
  • Position rankings and any tiers within each job classification
  • Industry research to ensure that job value and compensation remain accurate 
  • A generalized budget for your personnel 

Determining the value of each employee will help you in creating that generalized budget. Each department will naturally have tiers of manager positions and workers who report to those managers. Understanding the workflow here will aid in pinpointing the monetary value of every role.

Step 2. Manage Compensation Effectively

Many companies appoint a compensation manager to oversee fair compensation across a vast workplace. It can be difficult to keep track of compensation for every employee, especially in large companies, so assigning these responsibilities to one or two people is more effective. This position is typically given to someone in the human resources department. 

In addition to adding a compensation manager, your organization should invest in compensation management software. Not only will this technology support you in making data-driven compensation decisions, but it will guide you through various steps of the fair compensation process; total compensation allocation, complex award calculations, and more. This technology will provide access to the market data you need and streamline the next few steps of creating your fair compensation plan.

Step 3. Develop a Market-Based Approach

Gathering market data coincides with the industry research from the outline you’ve created. Fair compensation is based on various data-driven decisions, and you need to access that data before ironing out any conclusive numbers. This market-based approach is one that you can rely on, as it is based on facts and won’t exhibit bias. 

Industry, company size and location are a few elements you should take into consideration when developing a market-based approach. You will also want to review wage information from your market. Sometimes small and medium-sized businesses have trouble finding relevant data, as the nuances within certain industries are difficult to apply to a fair compensation plan — compensation management software can help with this. 

Benchmark data will help you figure out a position’s pay range:

  • Minimum: the lowest amount you would expect to pay more employees in a role
  • Median: the amount you would expect to pay the majority of employees in a role
  • Maximum: the most you would be willing to pay to someone in a role

When in doubt, the median amount is often the best place to start, as this number will aid in attracting superior talent but will be financially sustainable for the employer.

Step 4. Establish Pay Ranges 

Every fair compensation model has pay ranges that apply to every position in an organization. Using your outline and the market research you’ve done, you can now establish pay ranges for every position in your organization. Each pay grade is based on the level of responsibilities required to perform a role, the amount of authority in that role, and the length of time an employee has worked in that role.

The value of a particular job title may not have the same value across an industry, which is why the market research you’ve done will become so important in this step. The data you’ve uncovered will help you shape the pay ranges at your specific company.

It’s also beneficial to plan ahead and pinpoint the salary adjustments that come along with raises and promotions. What is the natural path an employee will experience after succeeding in a certain role for a number of months or years? How will compensation be adjusted according to experience and time spent at your organization? These are both questions you should be able to answer for every role in every department.

Step 5. Implement & Communicate Across the Workplace

Now that the research and planning are behind you, it’s time to implement fair compensation across your organization. If you decide to appoint a fair compensation manager, this responsibility will partially fall on that role. It will also fall to leadership, as the compensation manager needs clear instructions and guidance for this implementation. 

And lastly, while you don’t need to be completely transparent about pay, you should communicate your fair compensation plan to employees. It’s important employees know that you value fair compensation and that you have their best interest at heart. Both current and potential employees will appreciate this, and when people are applying to work at your company, they will be impressed at your dedication to treating workers fairly. 


Everyone wants to work for an organization that promises fair compensation. Implementing a fair compensation plan across your workplace will reflect your values and indicate that your company is a great place to work, which helps to boost recruiting and retention.

HRSoft’s COMPview Software makes fair compensation easy to implement across any organization. This award-winning compensation management solution has the ability to manage an entire compensation cycle, recognize top performers, and so much more. Contact us to learn more.