compensation-and-leveling git:20260828.f80dcb5A

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---
name: compensation-and-leveling
description: 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.
---

# 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.