Pay Equity & Compression
Statistical gap analysis (regression-controlled) and compression diagnostics across promotion ladders and new-hire vs incumbent pairs.
Run regression-controlled equity analysis (controlling for level, tenure, geo, performance) and flag unexplained gaps. Separately, diagnose compression — IC-to-manager, promotion lift, new-hire vs incumbent.
Employee master, last-2yr base salary history, performance ratings, promotion history, and geo assignment.
Per-cohort unexplained gap %, statistical significance, and recommended remediation. Compression ratios for each ladder pair.
Statistical significance requires n ≥ 30 for the cohort; smaller cohorts get a qualitative review only. Engage outside counsel for any cohort with p < 0.05.
Two unexplained gaps are statistically significant: Female ICs (-2.8%) and Female managers (-3.4%). Remediation cost is contained ($118K total annualized for 30 employees) and can land within this cycle.
Close the two flagged gaps in this cycle. Phase a quarterly cadence for refresh + new-hire compression monitoring.
| Cohort | Comparison | Gap % | n | Significance | Remediation |
|---|---|---|---|---|---|
| Female ICs vs Male ICs (P3-P5) | Base, controlled for level + tenure + geo | -2.8% | 168 | Significant | Targeted base adjustment of $48K total annualized across 24 employees identified by the regression. |
| URM employees (P3-P5) | Base, controlled for level + tenure + geo | -1.6% | 92 | Not significant | No statistically significant gap; continue monitoring. |
| Female managers (M5-M6) | Base, controlled for level + tenure + geo | -3.4% | 24 | Significant | Targeted base adjustment for 6 manager-level employees; refresh promotion-rate analysis. |
| Engineering L4-L5 | Base, controlled for performance rating | -1.1% | 60 | Not significant | Gap explained by tenure mix; no action. |
Two statistically significant gaps (Female ICs −2.8%, Female managers −3.4%). Compression is acute at three pairs: P4→P5, P4 new-hire vs incumbent, and P4→P5 promotion lift.
Unexplained gaps drift into legal exposure; the comp committee will require a remediation plan with documented criteria. Compression is a quieter failure mode — it discourages internal promotion and erodes career-architecture trust.
(1) Fund equity remediation of $118K across 30 employees in the current cycle. (2) Lift P5 midpoint to widen the P4→P5 gap. (3) Add a new-hire compression check to the offer-approval workflow.
Documenting equity remediation creates discoverable evidence — counsel review is required before any communication.
- Is the comp committee aligned on documenting unexplained gaps as 'unexplained variance' rather than 'gap'? Word choice matters for legal posture.
- What's the current offer-approval workflow? Adding a new-hire compression check should slot into existing controls.
Regression uses 7 controls (level, tenure, geo, performance, function, manager, prior role). Adding more controls may reduce significance but also raises concerns about over-controlling.
Open Governance to add equity-refresh cadence to the controls inventory.