First things first – do you have job descriptions in place for all your team members? This is a fundamental first step in identifying which jobs require similar skills and tasks. We can’t create pay ranges for positions if we don’t know the work those positions entail! Create a spreadsheet that lists every job title in the organization with the relevant fundamental tasks, required educational level, required certifications, and other critical details. Slot those positions in order from entry-level jobs to high-level management positions. Consider factors like experience, education, and training as you rank the positions. Inevitably, there will be some judgment calls as you map out these positions. This step is both art and science, and that’s okay.

You’ll want to review the current pay for those positions as well as review market data to determine if your current pay falls below, at, or above market for your area. You can work with an HR consultant to conduct a market analysis, pay for reports that list out market rates, and do some digging online (knowing that all sites are not created equal when it comes to reporting salaries.) Typically, entry-level jobs have a narrower pay range, and high-level management positions have wider pay ranges. You also have a decision to make. Maybe you want your firm to lead the market, paying a higher rate than other firms to attract top talent. Maybe your aim is to pay right at market rate, or perhaps you want to lag the market and pay below market rate, knowing that some other aspect of your firm (like culture, training, prestige, or other benefits) will still attract top talent. Whatever your decision, be consistent across the board and add your pay ranges to your spreadsheet, keeping your payroll budget in mind throughout this process.

Once you’ve done your analysis, it’s time to look at your current team and analyze their pay. Identify any disparities in pay between male and female employees, as well as other demographic groups. You may be surprised by what you find here if you haven’t taken the time to look at this with a lens of pay equity in mind. I’ve been in this position and was appalled to discover that the only male in a fundamental position at an organization I led was paid significantly higher than his other five female counterparts, doing the exact same job for the same length of time, with equal education. How had this happened on my watch? It needed correction immediately.

This is the most crucial step. If pay gaps are identified, take steps to address them, such as adjusting salaries or re-evaluating job descriptions. This is called right-sizing. It can feel painful, but it’s absolutely necessary. It can also result in team member buy-in and increased retention. Imagine how an employee would feel if you PROACTIVELY approached them to let them know your analysis indicated that a pay raise was in order! Firms may balk at the budget needed to close the pay gap, but keep in mind that budget is not an acceptable defense to a discriminatory pay gap claim. Discuss solutions you can afford and create a plan with a timeline to institute those solutions. As a general rule, you should only raise salaries to right-size a pay gap, not lower the higher ones.

Conduct regular pay audits to ensure that any pay disparities are corrected and that your firm is aligned with the principle of pay equity. This is an ongoing process, as pay is a moving target.

This approach helps your organization have pay equity, and it also helps you have cogent conversations at review time. If your pay ranges are transparent and a team member is asking for a raise that puts them out of range, you have an objective rebuttal. When a star team member asks for a raise that places them out of range, it’s time to flip that conversation. Consider instead if there is a path for growth for them. What’s the next stepping stone that comes with a higher range? What steps could they take to put them in the running for that position? The answer doesn’t have to be a no. It can be a cogent conversation about growth.