Most companies put significant thought into the compensation review process. But a review can finish on time, stay within budget and still produce outcomes you can’t fully defend.
A process that looks good on paper can still leave room for bias, discretion and exceptions, leading to unjustified pay discrepancies.
The only way to be sure your compensation reviews are achieving the goals set out in your compensation philosophy is to check the actual outcomes for fairness and consistency. Keep reading to learn what data to analyse, which patterns to look for, and how to use your findings to improve the next cycle.
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Your compensation review isn’t over until you’ve checked the outcomes
After a review cycle, most teams look at operational success first. Did it finish on time? Did you stay on budget? Did managers stick to the process?
These things matter — but they don’t tell you whether the final pay decisions were fair, consistent or explainable. To assess that, you need to look at the review from a different angle, asking questions like:
- Were pay differences based on clear, explainable criteria?
- Did managers apply review guidelines consistently?
- Were there too many exceptions and outliers?
- Did merit increases correspond with high performance ratings?
- Did you improve pay equity or create new gaps?
Legislation like the EU Pay Transparency Directive makes all of this more urgent by putting pay decisions under greater scrutiny. Under the Directive, employers will need to be able to explain pay differences using objective, gender-neutral criteria.
But even outside of formal compliance, compensation leaders need to know whether the outcomes of their compensation reviews are defensible and fair.
Start with the data behind each decision
If you want to know if a pay decision was fair, you need to understand the full context behind it. In the context of a company-wide compensation review, that usually means looking at the manager’s initial recommendation, what changed during the review process, and why.
Other factors like budget, salary band position and performance data provide important context for understanding whether similar cases were handled consistently.
If this information is spread across multiple spreadsheets and software programs, you’ll need to gather it together before you can start your assessment.
For this reason, it can be useful to use a dedicated tool like Figures for compensation reviews. This way, you’ll be able to centralise recommendations, adjustments, salary bands, budgets, exception requests and equity checks in one place, making it easier to analyse decisions before and after the review.
Where fairness problems show up after a compensation review (and what to do about it)
A single outlier doesn’t necessarily indicate a problem with your review process. The point of assessing outcomes is to look for patterns that suggest your process may not be working as intended.
For example, you may find that a certain manager awarded consistently higher increases than others, or that exceptions were clustered in one team or department. You may also find that final outcomes don’t reflect the things your compensation philosophy says you reward.
Here are six places to look for fairness problems after a compensation review, and what to do if you find them.
- Different pay decisions get treated as one category
In most companies, several different types of pay increases may be awarded during a compensation review. If you analyse them all together, it becomes much harder to understand whether outcomes are fair.
For example, a big increase may look like an outlier until you realise it was linked to a promotion, equity correction or market adjustment. To properly assess fairness, you’ll first need to separate pay decisions by the reason behind them. These might include:
- Merit raises
- Promotions
- Equity corrections
- Market adjustments
- Retention exceptions
- Compliance adjustments
- General increases
This allows you to clearly see which employees received which type of increase. It also lets you analyse fairness within each category before looking at the cycle as a whole.
💡How Figures helps: Figures allows teams to manage merit increases, promotions, salary adjustments and other pay decisions within a single compensation review campaign. That makes it easier to separate decisions by reason, rather than treating every increase as the same type of outcome.
- Different managers apply criteria inconsistently
Even when managers are using the same pay criteria, they may not be applying them in the same way. And in some cases, criteria may be unclear or too open to interpretation.
Looking at the outcomes of your review by manager or team can help you identify patterns that suggest different managers are taking different approaches. This might involve assessing:
- Average increase by manager
- Median increase by manager
- Budget use by manager
- Number of exceptions requested
- Number of exceptions used
- Deviations from initial recommendation
Keep in mind that there may be legitimate reasons why one manager’s outcomes are different from another’s. For example, one team may have more high performers or more employees who start off towards the bottom of their salary bands. Certain roles also have more market pressure, meaning that larger increases may be justified as a retention measure.
“The more discretionary elements there are — manager decisions without objective criteria, negotiation — the more risk you carry.” — Virgile Raingeard, Figures CEO and Founder
The issue is variance that can’t be explained by consistent criteria. This usually points to one of three issues: unclear manager guidance, weak calibration, or not enough training on how to apply the criteria.
💡How Figures helps: Figures gives managers a structured workspace for salary recommendations, while HR keeps visibility over budgets, approvals and decision history. This makes it easier to compare how different managers applied the review guidelines, and to spot where outcomes may need a closer look.
- Pay increases don’t reflect performance ratings
If your review cycle is meant to reward performance, you need to ensure it’s actually doing that. The first step is to ensure you have a fair and unbiased performance review process, and a consistent performance rating scale.
Then, analyse the results of your compensation review by looking at:
- Average increases by performance rating
- Distribution of increases within each rating group
- Differences in how ratings translated to pay
Red flags include top performers who received low or no increases, and average performers with unusually high increases. Of course, these may be explainable: performance is not the only factor in pay decisions, and outliers could be linked to market adjustments, recent promotions or equity corrections.
Again, the issue is discrepancies that can’t easily be explained. If the link between pay and performance is weak across the organisation or within certain teams, it may point to problems with performance criteria, calibration or compensation guidelines.
💡How Figures helps: Figures can combine performance ratings, market data and salary bands into recommendation guidance. That gives HR and managers a clearer reference point when checking whether performance-related increases are being applied consistently.
- Salary band movement isn’t taken into account
The same percentage increase could mean very different things to two employees depending on where they sit within their salary band. For example, a 5% increase might move one employee from below range to within their salary band. But for someone already near the top of the band, the same increase could push them above the maximum.
That’s why it’s useful to compare salary band position before and after the review. Look at:
- Whether employees below range moved closer to the right level
- Whether anyone moved above range for their role and level
- Whether employees in similar roles are sitting in different places within the band
If you find patterns that are hard to explain, this may mean your salary bands are outdated, managers are not using the pay framework consistently, or you need a clearer policy for dealing with salary band outliers.
💡How Figures helps: Figures connects compensation reviews with salary bands, so teams can see how each decision affects an employee’s position within the wider pay framework. This makes it easier to check whether increases move employees through bands in a consistent and explainable way.
- Exceptions stop being exceptional
Even a strong compensation review process may allow for the occasional exception. For example, a manager may request a higher increase for an employee who is seen as a retention risk. Or, market conditions may require larger increases for certain key roles.
The problem starts when exceptions stop being exceptional. Too many exceptions can undermine your process, especially if similar cases are not handled in similar ways.
That’s why it’s important to review things like:
- How many exceptions were requested
- How many were approved
- Who requested them
- Why they were approved
- Whether similar cases were handled similarly
Look for exceptions that cluster by manager, team, country, role or demographic group.
If you find a lot of exceptions, it could mean that managers need more training to stay within your defined criteria. But it could also indicate that the criteria themselves are no longer fit for purpose and need to be updated.
💡How Figures helps: Figures helps teams justify decisions with data-backed recommendations and a full, audit-ready record of past decisions and the reasoning behind them. That makes exceptions easier to review after the cycle: who requested them, why they were approved, and whether similar cases were handled consistently.
- Final outcomes create or widen equity gaps
Particularly within the context of the EU Pay Transparency Directive, employers need to be sure their pay decisions are justifiable. That means you need to make sure your compensation review doesn’t deepen existing pay equity issues or introduce new ones.
One simple way to do this is to look at your gender pay gap before and after the review, both across the organisation and within each category of employees.
Keep in mind that raw averages can give you a misleading picture of pay equity within an organisation. Controlling for legitimate factors like level, role, location, tenure or performance can give you a more accurate view.
Of course, pay equity checks should be built into the review process, not only run after final decisions have been communicated. Using a tool like Figures makes it easier to incorporate these checks before outcomes are finalised, so teams can identify potential issues while decisions can still be adjusted.
💡How Figures helps: Figures supports pay equity analysis during and after compensation reviews, including real-time tracking of how reviews affect pay equity. That makes it easier to see whether final decisions reduce, maintain or deepen existing gaps before outcomes are finalised.
Use your findings to strengthen the next review cycle
Your annual compensation review is a regular pressure test of your compensation systems and processes. If your post-review analysis reveals patterns you can’t explain, you’ll need to take action to strengthen your process, and potentially the structure behind it.
Depending on the problem you’ve found, that might mean tightening decision criteria, providing additional training, reviewing salary bands, or building a policy for outliers and exceptions.
If you do it right, the next cycle should produce fewer surprises: clearer criteria, better documentation, stronger calibration, cleaner data and fewer unexplained outcomes.
Common compensation review issues and what to do about them
- High manager variance → tighten manager guidance and calibration
- Weak link between performance and pay → clarify review criteria
- Too many exceptions → define stricter exception rules and approval paths
- Band issues → update salary bands or benchmark data
- Equity gaps widened → run equity checks earlier in the cycle
- Budget used inconsistently → improve budget allocation rules
Fair pay decisions require a solid structure
Pay decisions are easier to defend when they are guided by clear criteria, supported by a strong pay structure and controlled through consistent approval workflows.
Using a tool like Figures makes it easier to apply compensation criteria consistently, centralise review data and analyse outcomes once the review is over. That includes comparing initial recommendations with final outcomes, tracking exceptions, checking movement within salary bands and running pay equity analysis before and after decisions are finalised.
Figures can also help you to build and maintain structured salary bands, benchmark salaries against the market and comply with the Pay Transparency Directive with in-built pay equity analysis.
Want to learn more? Sign up for a free demo to see Figures in action.
