24.3 Aligning Roles and Pay Structures Post-Redesign

Chapter 24: Job Architecture and Organizational Redesign

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Next: 24.4 Technology Tools for Job Evaluation and Mapping

Basic Summary

This page explains how to realign roles and pay structures after an organizational redesign. It covers how to map new roles to job architecture, refresh pay ranges and bands, ensure market competitiveness, and maintain internal equity while staying compliant with pay transparency and labor regulations. It provides practical frameworks, policies, decision criteria, and step‑by‑step guidance for implementing the new structure, managing exceptions and transitions, budgeting for pay adjustments, coordinating with HR systems, and communicating changes to leaders, managers, employees, and worker representatives.

Summary

Aligning roles and pay structures post‑redesign is a pivotal moment for any organization. It is when the blueprint of a new organization—its job architecture, career pathways, and operating model—meets the reality of pay practices, market conditions, regulatory expectations, and employee trust. Done well, alignment yields a coherent, fair, and competitive system that supports strategy, enables mobility and skills growth, and reduces inequities and compliance risk. Done poorly, it can entrench misaligned roles, generate pay compression and inequity, erode morale, and trigger attrition or disputes.

This page equips HR and rewards leaders with practical, end‑to‑end guidance. It begins with foundational concepts—job families, levels, competencies, salary structures, and market pricing—and proceeds to design principles that emphasize strategic fit, internal equity, market relevance, affordability, and transparency. It then details approaches for mapping incumbents into the new architecture, addressing role proliferation, and handling exceptions with guardrails. It covers multiple pay structure models (narrow grades, broad bands, career stages, hybrid structures) and range design (midpoints, range spreads, overlaps, and progression). It addresses geographic pay, skills premiums, incentives, and benefits alignment. It provides methods for modeling cost and pay distribution impacts, setting transition budgets, and applying policies like red‑circling and green‑circling to protect employees and manage costs.

Because legal and regulatory expectations have increased—especially around pay equity and transparency—this page offers actionable compliance practices for equal pay for equal work, pay reporting, works council consultation, exemption classification, and job evaluation documentation. It also provides a change management and communications playbook to prepare leaders and managers to talk about role leveling and pay decisions with confidence and empathy. The How it Works section offers a sequenced implementation plan supported by a RACI governance model, data requirements, and system cutover considerations.

Readers will find tools and examples they can adapt: sample range designs and calibration rules; a mapping table from legacy levels to new bands; risk registers; communications matrices; edge‑case policies; and scenario‑based budget planning. Throughout, the tone assumes experienced practitioners—linking to related pages for deeper dives on benchmarking, job grading, collective bargaining, technology, and risk management—while offering concrete, flexible guidance that can scale across geographies, business models, and maturity levels. By applying these guidelines, HR leaders can translate an organizational redesign into a compelling, equitable rewards system that supports execution today and growth tomorrow.

Introduction

Organizational redesigns occur for many reasons: implementing a new strategy, accelerating growth, simplifying operations, integrating acquisitions, embracing agile ways of working, digitizing, or reducing structural cost. Whatever the catalyst, redesigns invariably reshape roles: responsibilities shift, spans and layers change, new job families emerge, and skills requirements evolve. Aligning pay structures to those new roles is not an administrative afterthought—it is a strategic intervention that ensures the new design is staffed, sustainable, and credible.

Historically, many companies adopted rigid, hierarchical grading systems with narrow ranges and tightly controlled job descriptions. These systems provided order but often lagged the market and resisted change. Over the last decade, job architecture has evolved toward more flexible frameworks: broad bands that accommodate evolving roles; career stages that allow technical and managerial growth in parallel; skills taxonomies that connect learning and talent marketplaces to compensation; and agile job families that reflect product or platform structures. In parallel, regulatory and societal expectations for pay equity, transparency, and stakeholder accountability have intensified. In the EU, pay transparency regimes are expanding. In the US, pay range disclosures and equal pay laws have proliferated at state and local levels. Unions, works councils, and employee resource groups play active roles in shaping outcomes.

Against this backdrop, post‑redesign alignment must accomplish multiple objectives. It has to:

Reflect the organization’s strategic design and talent philosophy.
Be competitive in relevant labor markets while affordable in financial plans.
Reduce unnecessary job titles and shadow levels to simplify mobility.
Integrate skills and capability growth into progression and pay decisions.
Demonstrate internal equity and withstand regulatory scrutiny.
Be clear enough that managers can apply it and employees can understand it.

This page combines practical methodologies with decision criteria and governance. It emphasizes data‑driven market pricing, documented evaluation, and transparent rules. It also recognizes the human side of rewards—how pay changes are experienced, explained, and trusted. By following the guidance herein, HR leaders can move from an abstract organizational chart to a living system of roles and rewards that attracts, motivates, and retains the people needed for the strategy to work.

Core Concepts and Definitions

Job Architecture: The structured framework that organizes work into job families, sub‑families, levels, and career paths, describing scope, complexity, and required capabilities.

Job Family: A grouping of roles performing similar types of work (for example, Software Engineering, Sales, Finance) with common competencies and progression logic.

Career Level: A standardized rung in the architecture indicating increasing scope and complexity (for example, Entry, Intermediate, Senior, Lead, Principal).

Job Evaluation: A method to determine the relative value of roles (market‑based, point‑factor, whole‑job ranking) to ensure internal equity and consistent leveling.

Salary Structure: A set of pay ranges or bands (with minimums, midpoints, maximums) mapped to levels or grades, sometimes with geographic or business‑specific variants.

Range Spread: The percentage difference between a range’s minimum and maximum relative to its midpoint, indicating room for pay growth within a level.

Overlap: The degree to which pay ranges of adjacent levels intersect, enabling smooth progression and avoiding cliffs.

Midpoint Progression: The percentage increase in midpoints between adjacent levels, reflecting value progression and market differentials.

Red‑Circling: Temporarily freezing above‑range pay, allowing progression via promotion or inflation until the range catches up.

Green‑Circling: Temporarily placing pay below the range minimum, accompanied by a plan to bring pay to minimum via adjustments.

Market Pricing: Using external survey data to benchmark roles and calibrate ranges to percentile targets that align with pay philosophy.

Pay Equity: Ensuring equal pay for equal work or work of equal value, adjusted only for legitimate, documented factors (for example, performance, tenure, location).

Compa‑Ratio: An individual’s pay relative to the midpoint of the range (pay divided by midpoint), used to monitor positioning and progression.

Pay Transparency: The practice and regulatory requirement to disclose pay ranges and criteria, enabling employees and candidates to understand pay determination.

Skills Premium: An additive pay element recognizing scarce, critical, or emerging skills, applied via allowances, differentials, or progression rules.

Design Principles for Post‑Redesign Alignment

Strategic fit: Align levels, ranges, and incentives to the new operating model, not legacy structures.
Job family integrity: Maintain consistent leveling across functions while respecting unique market dynamics.
Market competitiveness: Anchor to relevant labor markets and percentile targets consistent with talent strategy.
Internal equity: Use job evaluation and calibration to ensure like roles are leveled and paid consistently.
Simplicity and scalability: Minimize titles and special arrangements; favor reusable patterns across geographies and businesses.
Transparency and defensibility: Document rationales, criteria, and exceptions; publish manager‑friendly guides and employee‑friendly overviews.
Compliance by design: Build equal pay and transparency requirements into structure, processes, and data.
Fiscal responsibility: Model costs, phase adjustments, and use targeted investments where they deliver the greatest value.
Change readiness: Equip leaders and managers with the knowledge and tools to communicate and administer the new system.
Continuous governance: Establish routines for maintenance, monitoring, and periodic recalibration as strategy and markets evolve.

Linking Job Architecture to Pay Structures

Post‑redesign alignment begins with the new job architecture. Every element of pay should map to it:

Job families and sub‑families link to market cuts for pricing and survey matches.
Career levels map to grades or bands, with clear descriptions and a leveling guide.
Competencies and skills define progression criteria and influence skills premiums.
Career paths (individual contributor and management) align so that pay growth is comparable across both ladders for equivalent impact.
Geographic variants are tied to levels/bands via location factors and regional structures.

A robust mapping ensures consistent slotting of roles, enables mobility, and reduces the proliferation of one‑off pay decisions. The following sections translate these ideas into process, options, and tools.

Role Mapping After Redesign

Post‑redesign, established roles may no longer fit; new roles emerge. A structured mapping process is essential:

Inventory legacy roles and incumbents with job descriptions, responsibilities, location, pay, grade, and manager.
Translate redesigned roles into the standardized architecture with definitive level definitions and decision criteria.
Perform job evaluation (market match and/or point‑factor) to place roles consistently.
Conduct cross‑functional calibration to reconcile discrepancies and ensure equity across job families.
Map incumbents to the new architecture via best‑fit placement, not just title equivalence.
Document exceptions and rationale; apply red‑/green‑circling policies where needed.

This structured mapping reduces title drift, limits shadow levels, and creates a defendable baseline for new pay ranges.

Pay Structure Options and Range Design

Organizations can use different pay structure models depending on strategy, scale, and market dynamics:

Narrow grades: Many levels with tighter ranges and lower overlaps; useful in highly regulated or unionized environments with step progression.
Broad bands: Fewer, wider bands supporting flexibility and internal mobility; requires robust governance to manage discretion.
Career stages: Structures aligned to job architecture stages (for example, Early, Experienced, Senior, Leadership), often with sub‑ranges.
Hybrid structures: Broad bands for dynamic functions (for example, technology, product) and narrower grades for operational or administrative roles.

Range design considerations include:

Midpoint progression by level, aligned to value differentials and market benchmarks.
Range spreads that reflect expected performance and tenure progression within a level.
Overlap that allows movement without pay cliffs and supports career development.
Geographic pay strategies—regional ranges, zone factors, or fully localized structures.

Integrating Incentives, Benefits, and Skills Pay

The alignment must reach beyond base pay:

Short‑term incentives: Recalibrate eligibility, targets, and metrics to the new roles and spans; ensure comparable opportunity across IC and manager paths.
Long‑term incentives: Align eligibility thresholds and vehicles with leadership impact, critical technical influence, and market norms.
Benefits and perquisites: Reassess appropriateness and fairness by level and location; remove legacy entitlements that no longer fit.
Skills premiums: Design targeted, time‑bound premiums for scarce skills; connect to learning pathways and sunset criteria.

Compliance, Equity, and Transparency

Modern pay systems must be audit‑ready:

Equal pay for equal work or work of equal value: Document job evaluation, market matches, and pay decisions; correct unexplained gaps.
Pay transparency: Prepare externally posted ranges and internal explanations; align manager scripts and FAQs.
Works council and union engagement: Share rationale, data, and impacts; consult per local law and agreements.
Exemption classification and overtime: Reassess exempt/non‑exempt status after job redesign.
Data retention and privacy: Manage sensitive pay data responsibly and lawfully.

Implementation Mindset

Treat post‑redesign alignment like a strategic program:

Use a clear charter and governance with executive sponsorship.
Balance speed with accuracy—deploy in phases where necessary, prioritizing high‑impact job families.
Build tools for repeatability—leveling guides, mapping templates, range calculators, pay equity dashboards.
Design communications for understanding and trust—make it simple, human, and consistent.

The remainder of this page offers detailed execution guidance, tools, and examples.

Key Concepts and Frameworks

Job Families, Levels, and Dual Ladders

Job Families and Sub‑Families: Group work with similar purpose and market dynamics to simplify benchmarking and career mobility. For example:

Engineering (Software, Data, Infrastructure)
Sales (Field, Inside, Account Management)
Corporate (Finance, Legal, HR)
Operations (Manufacturing, Logistics, Customer Support)

Levels: Define level descriptors that articulate scope, complexity, autonomy, influence, and problem‑solving. Provide examples of typical responsibilities and indicators for each level.

Dual Ladders: Offer parallel advancement for Individual Contributors (IC) and People Managers (M) with comparable pay opportunities at equivalent impact levels. Clearly describe transitions, expectations, and typical team influence at each ladder.

Leveling Guide: A practical tool where managers and HR can evaluate role fit. For each level, include:

Scope and impact definitions
Knowledge/skills and decision‑making
Typical experience range (avoid strict years of service)
Examples of deliverables and problems solved
Behavioral indicators and leadership expectations

Salary Structure Anatomy

Grade/Band: The pay container assigned to a level.

Minimum, Midpoint, Maximum: Anchor values that define the pay range. Midpoint often aligns to a target market percentile.

Range Spread: Determines within‑level growth potential. For instance, 40% spread implies the max is 20% above midpoint and the min is 20% below.

Overlap and Progression: Design overlaps so that high performers at a lower level can be near the low end of the next level, avoiding cliffs and supporting advancement.

Location Variants: Decide whether to use localized ranges, geo‑differentials (zones), or a single global range with location multipliers.

Market Pricing and Survey Strategy

Market Definition: Identify relevant markets by function, level, industry, company size, and geography.

Survey Sources: Use multiple reputable surveys; triangulate data; normalize to common currency and timing; adjust for aging (trend).

Matching Method: Match roles to survey benchmarks using content and level—not titles. Validate with job descriptions and responsibilities.

Target Positioning: Choose a percentile target by job family and level based on talent strategy (for example, 75th percentile for AI engineers; 50th for corporate support).

Aging and Indexing: Apply consistent annual aging factors; use high‑volatility indices for hot skills if needed.

Internal Equity and Pay Equity

Internal Equity: Ensure roles of comparable value are leveled and paid consistently across functions and locations.

Pay Equity: Analyze pay gaps by protected characteristics within comparable work groups. Control for legitimate factors and remediate unexplained gaps promptly.

Documentation: Keep a defensible record of job evaluation rationale, market matches, and pay decisions used in setting ranges and individual pay.

Policies for Exceptions and Transitions

Red‑Circling Policy: When pay exceeds the new range max:

Freeze base pay; allow lump‑sum merit.
Enable future movement via promotion or range updates.
Set review cadence and sunset conditions.

Green‑Circling Policy: When pay falls below the new range min:

Bring to minimum immediately or via staged adjustments within a specified period.
Protect from negative compa‑ratios; communicate clear timelines.

Compression Management: If new hires are near incumbents’ pay:

Protect internal equity through targeted adjustments, especially for strong performers and critical incumbents.
Monitor offer approvals and require justification for above‑midpoint offers.

Skills Differentials: Define eligible roles, quantification, validation, and sunset/renewal cycles.

Offer and Promotion Controls: Establish thresholds requiring HR or executive approval to ensure structural integrity.

Options and Design Decisions

Choosing a Pay Structure Model

Narrow Grades: Best when predictability and regulatory alignment matter. Pros: clarity, easier budgeting. Cons: rigidity, risk of title inflation.

Broad Bands: Best for dynamic, innovation‑driven environments. Pros: flexibility, mobility. Cons: requires disciplined governance to avoid inequities.

Career Stage Structures: Good for organizations embracing skills‑based growth. Pros: intuitive; aligns with learning pathways. Cons: requires strong architecture and clear descriptors.

Hybrid: Combine broad bands for technology/product roles with grades for operations or support. Pros: tailored; balanced. Cons: complexity in administration; requires robust communication.

Range Design Parameters

Set consistent parameters by level groupings:

Early career: 30–40% spread; 10–12% midpoint progression
Mid career: 40–50% spread; 12–15% midpoint progression
Senior/leadership: 50–70% spread; 15–20% midpoint progression

Calibrate to market differentials and promotion frequency. Ensure overlaps support development without creating double‑promotion shortcuts.

Geographic Pay Strategy

Options include:

Full localization: Distinct local ranges per country/region/city; highest precision; higher maintenance.
Zone factors: Group locations into cost tiers (for example, Zone 1–4) with multipliers applied to global ranges; balance precision and simplicity.
Headquarters‑based global ranges with limited exceptions: Simple; may under/overpay in divergent markets.

Choose based on geographic footprint, mobility goals, and compliance requirements. Document location factors, data sources, and review cadence.

Integrating Skills and Premiums

Approaches:

Skills add‑ons: Fixed monthly allowances for validated, scarce skills; time‑bound and reviewable.
Proficiency‑based progression: Within‑range movement tied to milestones in skill frameworks.
Market differentials: Temporary range adjustments for hot skills within specific job families.

Guardrails:

Independent validation (assessments, certifications, portfolio evidence)
Sunset or revalidation every 12–24 months
Equity monitoring to avoid systemic biases

Short‑Term and Long‑Term Incentives Alignment

Reconcile eligibility thresholds to new levels.
Update target opportunities and calibration guidelines.
Align metrics with the redesigned operating model (for example, product vs project outcomes).
Coordinate with sales compensation for new territories or customer segmentation.
Harmonize LTI eligibility for technical leaders and people leaders at equivalent impact levels.

How It Works

Establish Governance and Objectives: Form a cross‑functional design council with HR, Rewards, Finance, Legal/Compliance, and Business Leaders. Define objectives (for example, market competitiveness, equity, cost neutrality within X%, transparency compliance), decision rights, and a timeline aligned to the broader redesign milestones. Create a charter that specifies scope, principles, and success metrics. Secure executive sponsorship for visible support.
Confirm Job Architecture and Level Definitions: Finalize the job families, sub‑families, and level descriptors that emerged from the redesign. Ensure the architecture supports both people leader and individual contributor paths with comparable progression. Approve a leveling guide with evaluation criteria (scope, complexity, autonomy, impact) and examples to enable consistent application. Lock the architecture before building pay ranges to avoid rework.
Inventory Legacy Roles and Pay: Extract a clean dataset of all current roles, grades, titles, locations, incumbents, base pay, incentives, and employment status. Standardize titles and remove duplicates. Capture data on tenure, performance, and critical skills where available. Identify roles impacted by redesign (to be created, merged, split, or sunset). Validate data quality with HR operations and business HR partners.
Conduct Job Evaluation and Market Pricing: For each redesigned role, complete job evaluation using your chosen method (for example, market match first, then point‑factor where market is thin). Select relevant survey benchmarks by function, level, and industry; triangulate across sources. Aging the data to a common date and convert to a consistent currency. Determine target percentiles by family and level consistent with pay philosophy. Document matches and rationale.
Design Salary Structures: Translate evaluation and pricing into a coherent set of ranges or bands. Set midpoints to align with targets; define spreads and overlaps by level category. Decide on geographic strategy (localized structures, zone factors, or multipliers) and build the location variants. Ensure internal equity checks across adjacent levels to avoid unrealistic cliffs or excessive overlap. Produce a structure specification and calculator.
Map Roles and Incumbents to the New Structure: Slot each redesigned role into a grade or band. Map incumbents using best‑fit placement based on responsibilities and level definitions, not solely on legacy grade or title. Run calibration sessions across functions to resolve discrepancies and ensure consistent leveling. Identify outliers (red‑circle, green‑circle, compression risks). Record decisions and rationales for auditability.
Model Financial and People Impacts: Build scenarios for bringing green‑circled employees to minimum, addressing compression, and funding promotions. Estimate the cost of red‑circle policies (for example, lump‑sum merit). Model merit cycles and market adjustments within the new structure. Analyze impacts on pay equity by comparable work groups and protected characteristics. Review affordability with Finance; determine phased implementation if needed.
Define Transition Policies and Guardrails: Finalize red‑circling, green‑circling, promotion thresholds, offer approval rules, skills differentials, and exception processes. Document a manager playbook and employee‑facing summary. Align performance and promotion calibration processes with the new structure. Establish rules for offer ranges (for example, typical offers between 90–105% compa‑ratio unless justified).
Engage Stakeholders and Social Partners: Brief executives and senior leaders; build alignment with People Leaders. Where required, initiate works council or union consultations with data packs that explain objectives, impacts, and employee protections. Incorporate feedback without compromising core design principles. Coordinate with Legal to ensure compliance with notification and consultation timelines.
Configure Systems and Data: Update HRIS/HCM job codes, grades/bands, and range tables. Map legacy grades to new ones; ensure effective dates align with pay cycles. Configure compensation planning tools with new ranges and guardrails. Update recruiting systems with public pay ranges for transparency compliance. Verify payroll and accounting interfaces (for example, cost center changes) and run parallel testing.
Train Managers and Prepare Communications: Deliver briefing sessions and toolkits that explain leveling, pay ranges, compa‑ratio management, and common scenarios. Provide scripts for discussing pay changes and promotion expectations. Publish employee‑friendly guides explaining the architecture, ranges, and how pay is determined. Ensure recruitment, mobility, and internal posting processes reflect the new structure and communicate transparently.
Implement, Adjust, and Monitor: Execute the transition—apply range changes, process adjustments, and update individual pay per policies. Track exceptions, employee inquiries, offer approvals, and attrition risk. Monitor pay equity and transparency compliance. Gather feedback from managers and employees; adjust processes and documentation as needed. Plan for post‑implementation reviews and an annual market calibration cycle to keep structures current.

Tools, Tables, and Templates

Example Salary Structure Design

Grade/Band	Level Descriptor	Range Min	Range Mid	Range Max	Spread	Midpoint Progression vs Prior	Typical Incentive Target
G5	Early Career Professional	52,000	65,000	78,000	40%	–	5%
G6	Experienced Professional	65,000	80,000	96,000	38%	23%	7%
G7	Senior Professional	82,000	100,000	118,000	36%	25%	10%
G8	Lead/Staff IC or First‑Line Manager	102,000	125,000	148,000	37%	25%	12%
G9	Principal IC or Mid‑Level Manager	128,000	160,000	192,000	40%	28%	15%
G10	Senior Leader/Director	165,000	210,000	255,000	43%	31%	20%

Notes:

Spreads widen with level to reflect increased differentiation.
Midpoint progression grows as roles scale in impact.
Incentive targets align with leadership scope and market norms.

Legacy‑to‑New Mapping and Actions

Legacy Grade	Typical Title	New Band	Mapping Logic	Risk/Issue	Action
L3	Analyst	G5	Scope and autonomy fit Early Career profile	Pay below new minimum for some incumbents	Green‑circle; adjust to min over two cycles
L4	Senior Analyst	G6	Content matches Experienced Professional	Title inflation in some units	Calibrate titles; maintain G6
L5	Specialist	G6/G7	Roles split by complexity	Internal equity variance across regions	Re‑evaluate in calibration; harmonize pay
L6	Manager	G8	People leadership scope fits first‑line	Compression with senior ICs in G7	Targeted adjustments for critical G7s
L7	Senior Manager	G9	Strategic scope fits Principal IC/Mid‑Mgr	Over‑graded in some support functions	Slot to G8 where evaluation indicates

Red‑/Green‑Circling Policy Rules

Scenario	Definition	Policy	Review Cadence
Red‑Circle	Base pay above new range max	Freeze base; provide lump‑sum merit up to 2% for strong performance; re‑eligible for base increases when below max	Semi‑annual check against updated ranges
Green‑Circle (Immediate)	Base pay below range min by ≤5%	Bring to range minimum effective on transition date	Annual
Green‑Circle (Staged)	Base pay below range min by >5%	Phase to minimum over 2 cycles with at least 50% of gap closed in cycle 1, barring affordability constraints	Annual

Governance and RACI Matrix

Activity	Rewards COE	HR Business Partners	Finance	Legal/Compliance	Business Leaders	Works Council/Union
Set design principles and objectives	R	C	C	C	A	I
Job evaluation and market pricing	R	C	I	C	C	I
Salary structure design	R	C	C	C	A	I
Role mapping and calibration	R	R	I	I	A	I
Financial modeling and budget	C	I	R	I	A	I
Policy setting (red/green, approvals)	R	C	C	C	A	I
Works council/union consultation	C	C	I	R	C	A
HRIS configuration and data	R	C	I	I	I	I
Manager training and communications	R	R	I	C	A	I
Pay equity review and remediation	R	C	C	R	A	I

Legend: R = Responsible, A = Accountable, C = Consulted, I = Informed

Adjustment Budget Scenarios

Scenario	Green‑Circle Cost	Compression Fix Cost	Promotions	Red‑Circle Lump Sums	Total Impact vs Payroll	Notes
Conservative	0.3%	0.2%	0.2%	0.1%	0.8%	Phase green‑circle over two cycles
Base Case	0.5%	0.4%	0.3%	0.2%	1.4%	Targeted compression fixes for critical roles
Accelerated	0.8%	0.6%	0.5%	0.3%	2.2%	Immediate green‑circle to minimum

Communications Plan by Audience

Audience	Objectives	Key Messages	Channel	Timing
Executives	Align on design and investment	Strategic fit, equity, affordability, risk controls	Briefings, deck	T‑6 to T‑4 weeks
People Leaders	Build understanding and capability	Leveling, ranges, policies, manager toolkit	Virtual sessions, Q&A	T‑4 to T‑2 weeks
Employees	Build trust and clarity	What changed, why, how pay is determined, where to get help	Email, intranet, FAQs, office hours	T‑1 week to launch + ongoing
Works Council/Union	Inform/consult per law	Rationale, impacts, protections, comparators	Formal consultation	Per legal timeline

Risk Register Snapshot

Risk	Likelihood	Impact	Mitigation	Owner
Pay compression post‑adjustment	Medium	High	Offer controls; targeted incumbent adjustments; monitoring	Rewards
Non‑compliance with transparency laws	Low	High	Standardize public ranges; legal review; recruiter training	Legal
Calibration inconsistency across functions	Medium	Medium	Cross‑functional panels; escalation path; audit sampling	HRBPs
Attrition in critical roles	Medium	High	Market adjustments; skills premiums; retention awards	Business Leaders
Budget overrun	Medium	High	Phased implementation; prioritization; Finance gates	Finance

Localization Levers Matrix

Lever	Description	When to Use	Pros	Cons
Local Ranges	Full market‑priced ranges per location	Large headcount; material market variance	Precise; competitive	Complex; maintenance heavy
Zone Factors	Grouped geo multipliers (for example, Zone 1–4)	Many locations; moderate variance	Scalable; consistent	Less precise locally
Global Range + Cost‑of‑Labor Adjustment	Single global reference with location adders	Limited footprint; mobile workforce	Simple; transparent	Might over/underpay locally

Detailed Guidance and Practical Considerations

1. Role Mapping and Calibration

Purpose: To ensure that roles are consistently placed in the new architecture and corresponding pay structures based on actual scope and complexity.

Practical steps:

Build role profiles that focus on outcomes and decision rights rather than tasks or legacy titles.
Create a mapping workbook listing legacy title, legacy grade, manager, location, incumbent, new family/sub‑family, new level, recommended band/grade, and notes.
Run calibration forums by major function, then cross‑functional review. Keep a facilitation guide and enforce evidence‑based decision‑making using the leveling guide.
Identify roles at risk of title inflation. Pressure‑test with adjacent roles across families to maintain internal equity.
Record corner cases with justification, ensuring exceptions do not become the norm.

Common pitfalls:

Overvaluing rarity of role over scope (for example, “only one person does this”).
Conflating high performer status with higher role level.
Allowing historical pay to drive level placement; level should be about role value, not current incumbent pay.

2. Salary Range Calibration

Setting midpoints:

Use aggregated market data at target percentiles per job family and geography.
Where survey data is thin, combine point‑factor evaluation with market proxies and internal relativities.

Determining spreads and overlaps:

Match spread to expected time‑in‑level and performance differentiation. Early career roles typically have shorter time‑in‑level and narrower spreads.
Ensure at least 5–10% overlap between adjacent levels to avoid pay cliffs.

Testing the structure:

Run compa‑ratio distributions across roles to see how the workforce sits against the new ranges.
Perform sensitivity tests for potential market movement (for example, high‑volatility tech roles).

Documenting the structure:

Create a structure guide including level descriptors, range parameters, geographic variants, and administration rules. Publish manager‑facing summaries and HR detail.

3. Geographic Strategy in Practice

Choosing a model:

For a headquarters‑centric company with limited satellite offices, a global structure with location factors may suffice.
For a multinational with diverse talent markets, prefer local ranges or zone factors.

Currency and inflation:

Convert all ranges to local currency; apply consistent FX rates with periodic updates.
Address high‑inflation environments with mid‑year reviews or variable COLA policies, balanced against market competitiveness to avoid wage‑price spirals.

Mobility implications:

Define rules for reassigning ranges when employees relocate, including timing, adjustments, and whether changes are reversible for short‑term moves.
Consider remote work policies and cross‑border compliance.

4. Integrating Skills into Pay

Design choices:

Use skills premiums sparingly, with emphasis on time‑bound scarcity. Tie to validated proficiency, not self‑attestation.
Avoid stacking multiple premiums without caps; risk of inequity and budget bloat.

Governance:

Set a quarterly skills premium review with Talent and Business to assess market need and outcomes.
Link premiums to learning pathways and certification renewal to encourage capability development.

Communication:

Explain that premiums reflect market scarcity and criticality, and are reviewed regularly. Clarify they are not a substitute for promotion.

5. Incentives and Benefits Alignment

Short‑term incentives:

Update eligibility matrices based on new levels. Align targets to impact, not title.
Revise performance metrics to align with redesigned processes (for example, shift from project completion to product adoption metrics).
Maintain line of sight; avoid too many measures.

Sales compensation:

Redraw territories/segments consistent with redesign; re‑validate pay mix and leverage.
Manage transition risk with bridge guarantees where necessary, with clear sunset dates.

Long‑term incentives:

Align LTI eligibility to new leadership and critical IC levels. Consider vehicle mix (for example, RSUs vs performance shares) by role type.

Benefits and perquisites:

Remove legacy perks misaligned with the new structure. Ensure benefits eligibility is equitable and compliant across locations.

6. Pay Equity and Transparency Execution

Comparable work groups:

Define analytically using job family, level, and location. Include evaluation points where relevant.

Analysis:

Conduct regression‑based analyses controlling for legitimate factors (for example, tenure, performance, critical skills) to detect unexplained gaps.
Review both base pay and incentive outcomes.

'Remediation:

Prioritize action where gaps are largest, affecting the most people, and pose legal or reputational risk.
Coordinate with green‑/compression adjustments to optimize budget.

'Transparency:

Publish internal range frameworks and criteria for pay decisions. For external postings, provide compliant ranges and narrative on factors influencing offers.
Train recruiters and managers to discuss ranges consistently. Monitor adherence.

7. Manager Enablement and Employee Experience

Manager toolkit:

Leveling guide, range cheat sheets, compa‑ratio calculator, exception request forms, talk tracks, FAQs, and case studies.

Employee‑facing content:

Explain how roles are structured, how ranges work, and what influences pay growth. Emphasize performance, skill development, and progression opportunities.

Moments that matter:

Offer stage, performance reviews, promotions, lateral moves, relocation, and job posting. Ensure consistent messaging at each.

Feedback and listening:

Office hours, drop‑in sessions, and surveys to gauge understanding and trust. Use insights to improve materials and processes.

8. Systems, Data, and Controls

Data integrity:

Maintain a single source of truth for job codes, levels, and ranges. Use data validation routines and audit logs.

HCM/HRIS configuration:

Effective dating, legacy‑to‑new mapping, and full testing across payroll, benefits, and reporting.

Comp planning tools:

Rules for minimum/maximum increases, range penetration guidance, and automated alerts for policy violations.

Offer workflows:

Approval chains for offers above midpoints or outside standard bands. Capture justification fields and attach market matches for audit.

Reporting:

Dashboards showing compa‑ratio distributions, pay equity indicators, headcount by level, and offer trends.

9. Budgeting and Phasing Strategies

Prioritization:

Focus first on legal compliance (green‑circle to minimums where mandated) and critical workforce segments at highest risk of attrition.

Phasing:

Two‑ to three‑wave approaches allow learning and affordability. Communicate timelines to set expectations.

Merit integration:

Blend structural adjustments with the merit cycle to minimize disruption and optimize funding.

One‑time costs vs recurring:

Separate structural adjustments from ongoing merit to clarify run‑rate impacts and get Finance alignment.

10. Working with Works Councils and Unions

Engagement principles:

Early information sharing, transparency of rationale and data, and openness to input on implementation details that preserve core design.

Documentation:

Prepare packets summarizing evaluation methods, market data sources, impact analyses, and employee protections.

Bargaining topics:

Step plans, progression rules, skills differentials, and transition policies. Align outcomes with legal requirements and collective agreements.

Post‑agreement governance:

Joint review committees where appropriate; agreed reporting cadence on outcomes and equity.

Case Studies and Illustrative Scenarios

Scenario A: Tech Company Moving to Product‑Based Structure

Background:

A 2,500‑employee software company shifted from project delivery to product squads. Titles were inconsistent, with 220 unique titles, shadow levels, and highly variable pay.

Approach:

Consolidated to 12 job families, dual ladders for ICs and managers, and 8 global bands with zone factors for three geo zones.
Benchmarked to the 65th percentile for core engineering roles due to competitive market and strategy to attract top talent; 50th for corporate roles.
Implemented skills premiums for cloud architecture and machine learning, with 12‑month revalidation.

Outcomes:

Reduced titles to 80, enabling mobility and transparent career paths.
9% of employees were green‑circled; brought to minimum over two cycles. 6% red‑circled; moved to lump‑sum merit.
Compression identified in experienced ICs vs first‑line managers; targeted adjustments corrected disparities.
Post‑launch engagement scores on “I understand how pay works here” rose by 18 points; regretted attrition in engineering declined by 2.5 percentage points.

Lessons:

Calibrate early for IC vs manager parity to avoid compression.
Skills premiums require strong validation; sunset dates prevent creep.
Manager capability is the difference between controversy and confidence.

Scenario B: Manufacturing Enterprise Harmonizing Post‑M&A

Background:

Two manufacturing companies merged, each with granular grade systems and differing regional practices. Union agreements covered production workers.

Approach:

Created a common job architecture with 10 grades for production roles and broad bands for salaried staff.
Implemented local ranges for three major countries and zone factors elsewhere.
Negotiated step progression rules with unions and aligned differentials for shifts and certifications.

Outcomes:

Achieved consistency across plants with fewer grievances around promotions and pay.
Realized 1.3% payroll synergy through removing redundant premiums and aligning ranges while protecting incumbents via red‑circling where necessary.
Transparency materials reduced rumor‑driven disputes.

Lessons:

Respect collective agreements and harmonize only where evidence supports value.
Use data on skill scarcity and quality outcomes to justify differentials.

Scenario C: Services Firm Addressing Pay Equity and Transparency

Background:

A professional services firm expanded into jurisdictions with pay transparency laws. Legacy practices lacked standardized ranges and documented matches.

Approach:

Designed a career stage structure with documented ranges and explanatory narratives. Implemented a global offer approval process with mandatory range reference.
Conducted a pay equity analysis and prioritized remediation for unexplained gaps in consulting and marketing.

Outcomes:

Compliance achieved across transparency jurisdictions; audit trail maintained.
Unexplained pay gaps reduced by 60% in year one; improved perceptions of fairness.

Lessons:

Documentation is as important as design. Teach managers how to discuss ranges and factors confidently.

Frequently Asked Questions

Q: How do we handle a top performer whose pay is at the new maximum but not ready for promotion? A: Apply the red‑circle policy with lump‑sum merit. Provide a development plan and clarify what promotion readiness looks like. Consider non‑base recognition (for example, spot awards, expanded scope) while maintaining structural integrity.

Q: What if market data is sparse for a niche role? A: Use point‑factor evaluation to place the role relative to internal comparators, and triangulate with adjacent market data, proxies, or targeted custom cuts. Document rationale and revisit as market data matures.

Q: Should we move everyone to the midpoint? A: No. Midpoint reflects market value for a fully proficient performer. Use compa‑ratio guidelines considering performance, tenure in role, and skill proficiency. Reserve above‑midpoint positioning for sustained high performance and deep expertise.

Q: How do we prevent compression when hiring into hot markets? A: Set offer guardrails (for example, typical offers at 90–105% compa‑ratio) with escalation for exceptions. Monitor offer vs incumbent pay; budget targeted adjustments for critical incumbents. Use skills premiums rather than base leaps where appropriate.

Q: How often should we update ranges? A: Typically annually, aligned to survey release and budgeting cycles. Review more frequently for high‑volatility segments or high‑inflation geographies. Conduct off‑cycle adjustments as needed for acute market shifts.

Q: What is the difference between job level and performance level? A: Job level reflects role scope and complexity; performance level reflects how well an individual performs in that role. Compensation should consider both, but leveling decisions must remain independent of individual performance.

Q: How do we integrate remote work into geographic pay? A: Define policy upfront—either pay by employee residence, assigned office, or zone. Ensure consistency, compliance, and clarity. For moves, specify timing, approvals, and financial adjustments.

Q: How do skills premiums end without damaging morale? A: Communicate upfront that premiums are time‑bound and subject to review. Provide a lead time for changes, align with career development options, and recognize contributions in other ways (for example, scope, visibility, incentives).

Metrics and Monitoring

Core KPIs:

Market alignment: Percentage of roles with midpoints within ±3% of target market percentile
Range health: Distribution of compa‑ratios; percentage green‑circled and red‑circled
Pay equity: Unexplained pay gaps by comparable work group and characteristic
Compression indicators: New hire vs incumbent pay differentials beyond policy thresholds
Offer governance: Percentage of offers outside guardrails and approval cycle time
Promotion outcomes: Internal fill rates, time‑in‑level distributions, and post‑promotion performance
Retention: Regretted attrition rates in critical roles post‑implementation
Manager capability: Training completion, knowledge quiz results, and employee understanding scores
Financial impact: Structural adjustment cost vs budget; ongoing payroll run‑rate change
Compliance: Audit findings, transparency posting accuracy, and consultation milestones met

Monitoring cadences:

Monthly: Offers, exceptions, and compression flags
Quarterly: Pay equity progress, skills premiums review, range penetration
Annually: Full market recalibration, structure updates, and governance review

Legal, Regulatory, and Ethical Considerations

Equal Pay and Non‑Discrimination:

Ensure like work or work of equal value receives equal pay unless justified by legitimate, documented factors (for example, performance, tenure, location). Use a structured evaluation method and maintain evidence.

Pay Transparency:

Provide pay ranges in job postings where required. Maintain consistency between internal structures and external postings. Train recruiters to discuss factors influencing offers without promising specific outcomes.

Exemption and Overtime:

Reassess exempt vs non‑exempt status after redesign, especially if duties changed. Align titles and job descriptions with actual duties; set overtime policies accordingly.

Works Council and Union Obligations:

Fulfill information, consultation, and negotiation requirements. Provide data and rationale. Document agreements and ensure alignment with structure.

Privacy and Data:

Treat pay data as sensitive. Limit access, log changes, and comply with data protection laws.

Ethical Pay Practices:

Avoid opportunistic pay disparities across comparable roles and locations when transparency would erode trust. Align executive and broad‑based philosophies to reinforce fairness narratives.

Change Management and Communication

Narrative:

Tie pay alignment to organizational strategy and employee opportunity. Emphasize fairness, clarity, and growth.

Stakeholder mapping:

Identify who needs to know what and when. Tailor content to executives, managers, employees, and social partners.

Channels:

Live briefings, recorded videos, intranet hubs with searchable FAQs, office hours, and toolkits.

Manager coaching:

Practice conversations about range placement, promotion readiness, and skills recognition. Provide scenarios and sample language.

Feedback loops:

Q&A capture, sentiment surveys, and manager debriefs. Iterate materials based on common questions.

Advanced Topics

Skills‑Based Organizations and Internal Marketplaces

Integrate job architecture with internal talent marketplaces. Use skills profiles to match work opportunities and inform within‑range movement. Ensure pay changes follow governance to avoid ad hoc premiums. Align learning pathways with skills premiums to create a closed loop: learn, validate, apply, earn.

Agile and Project‑Based Work

For squads and temporary teams:

Level roles by enduring capability, not transient project titles.
Define “mission allowances” for intense, time‑bound assignments where appropriate.
Avoid creating new salary bands for every project; use recognition programs for short‑term spikes.

Global Mobility and Cross‑Border Pay

When employees move across borders:

Choose a home‑based, host‑based, or hybrid approach. Align with tax and social security regimes.
Clarify how base pay adjusts and how allowances are handled.
Maintain equity with local peers while respecting cost and compliance.

Data Science for Rewards Governance

Use predictive analytics to:

Identify roles at risk of compression.
Forecast the impact of market movements on structure health.
Detect anomalies in offers and merit outcomes.
Support fair, consistent decisions with transparent, interpretable models.

Practical Examples and Manager Scenarios

Example 1: Offer at 110% of Midpoint Situation: Candidate with critical skills, scarce in market; internal peers at 95–100% compa‑ratio. Action: Require executive approval; assess internal equity impact; plan targeted adjustments for critical incumbents or offer a sign‑on or skills premium with sunset instead of permanent base increase.

Example 2: Lateral Move with Scope Increase Situation: Employee moves laterally to a different function at same level but higher complexity. Action: Within‑range adjustment justified by increased scope and market; document rationale; avoid re‑leveling unless scope meets next level descriptors.

Example 3: Green‑Circle After Localization Situation: Employee relocates to higher‑cost zone; base falls below new range minimum. Action: Bring to minimum effective relocation date per policy; communicate clearly and confirm offer letter addendum.

Example 4: Red‑Circle Legacy Perk Removal Situation: Manager previously had a car allowance no longer aligned with level policy. Action: Grandfather with sunset over 12 months; convert to lump‑sum where needed; align future eligibility to structure.

Implementation Checklist

Governance charter approved; design principles documented
Job architecture finalized; leveling guide published
Clean data inventory of roles, incumbents, and pay
Market pricing completed; evaluation documentation archived
Salary structures built; geographic strategy confirmed
Role mapping completed; calibration sign‑offs captured
Financial modeling and budget approved
Transition policies finalized; manager and employee guides drafted
Works council/union consultations completed where applicable
HRIS and comp planning tools configured; testing passed
Manager training conducted; communications launched
Go‑live executed; monitoring dashboards active; feedback loop established

Glossary

Architecture: The structured framework of job families, levels, and descriptors.

Band: A wide pay grouping covering multiple levels or a span of role values.

Compa‑Ratio: Pay divided by range midpoint; indicates market alignment for a role.

Green‑Circling: Temporarily placing pay below range minimum with a plan to reach minimum.

Midpoint: The central anchor of a range, often set to market target.

Overlap: The intersecting pay between adjacent ranges.

Point‑Factor: Job evaluation assessing compensable factors to quantify role value.

Red‑Circling: Freezing pay above range maximum, using lump‑sum increases.

Spread: The difference between minimum and maximum relative to midpoint.

Zone Factor: A geographic multiplier applied to pay ranges for location differences.

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