Behind Closed Doors: Compensation Reviews
Pay reviews look simple on paper. In reality, they're messy, political, and human. Our research reveals how 140 global companies handle the complexity.
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Does every other company have a perfect pay review process?
58% of compensation and People leaders rate their process as 1-3 out of 5 against their own success metrics. So you're not alone if you're questioning whether all the time and effort that goes into salary review cycles is actually driving the outcomes you want.
The teams who rate themselves highly consistently mention four things: clear communication with employees, well-prepared managers, streamlined processes, and confidence in their market data.
Are other companies separating performance from pay reviews?
86% include performance-based adjustments in their compensation review – the highest of all factors, followed by market-based adjustments and promotions.
But, People and Reward leaders seem to be questioning this approach. Survey responses revealed concerns that "the pay for performance model feels broken", due to both the subjectivity of performance evaluation and the danger of compounding inequities forming in salary structures due to merit increases.
How much line manager discretion do other companies include?
41% opt for centrally recommended compensation adjustments, with line managers able to make edits. This balances systematic fairness with manager insight – the People or Rewards team ensures recommendations are informed by market data, pay equity, and performance frameworks, whilst managers have the flexibility to adjust for their team's specific context.
Beyond this, there’s a mix of approaches to manager input – 20% give managers full control over outcomes, whilst 16% give none.
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