Compensation Review Process Template
Four documents and four sheets that total every manager's merit allocation and show which pay differentials the cycle widened, before it is approved.
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A merit cycle is 24 managers allocating a budget across their own teams, and each one can be completely defensible while the total widens a differential nobody proposed. Approval happens manager by manager too, so the person signing never sees the artifact that causes it. This pack runs the equity check across the whole proposal, once, before anything is approved. In the worked example that surfaced four job groups and eleven people, all of them invisible from inside any single team.
The second mechanism is the unit of measurement. Every recommendation is converted into a change in position in band, not a percentage, because an equal 3 percent on unequal bases widens the money gap and leaves relative position where it started. An equal allocation is a regressive allocation, and the percentage view cannot show it: both numbers on the screen read 3.0. The ratings feeding the cycle should have survived a calibration session first, or the cycle is spending money on unequal scales.
Third, the correction budget comes out of the pool before managers allocate anything. Marloe Logistics reserved 0.4 of 3.2 points up front, which funded all eleven corrections inside the same approval rounds and cost the merit pool four tenths of a point. Find the problem after the money is committed and it becomes an off-cycle request in Q3, which gets declined. Written for people leads and finance partners who have signed a cycle they could not later explain. The reviews behind the ratings come from review writing.
What is in the pack
Budget Allocation Model
The pool, the correction reserve taken out of it before manager pools are calculated, and what that reserve costs the merit pool in points.
Recommendation by Employee
Every eligible person with base, midpoint, position in band, rating, tenure in role and proposed award, plus band position before and after.
Equity Check
Three numbers per job group: before, if approved as submitted, after corrections. Cut by job code and level, plus aggregate demographic cuts at company and family level.
Approval Tracker
One row per round with a named approver and what changed as a result, including declined corrections and conditions attached to an approval.
Cycle Guidance
Three pages that go to managers before allocation opens. The pool, eligibility, what they are allocating against, and what will bounce.
Manager Brief and Communication Templates
What each manager is told after the check, and the four scripts they use: standard award, correction, zero, and below target.
Two rules every prompt reads first
The cycle is checked as one proposal, never manager by manager. Every zero award needs a written reason on the row.
How it works
- 1
Send payroll, bands and ratings
Current base by person, the band structure with midpoints, performance ratings, the budget, and location and tenure if you hold them.
- 2
Get the position-in-band baseline
Every eligible person converted from a salary into a position against their own band midpoint, before anybody allocates a single point.
- 3
Allocate against a reserved pool
The correction budget comes out first. Managers see a toward-or-away column beside each award, which is the only aggregate view available from inside a team.
- 4
Run the check on everything at once
Three numbers per job group before any approval, corrections priced to each comparator floor, and a tracker recording who approved what and what changed.
Frequently asked questions
Why position in band instead of percent?
Because an equal percentage on unequal bases is a regressive allocation. Two Implementation Consultants at 91.0 and 104.0 percent of midpoint who both get 3 percent finish 507 dollars further apart and in almost the same relative position. The percentage view shows 3.0 and 3.0 and cannot show anything else. The midpoints come from the band structure.
Does this override my managers' judgement?
No award was reduced and no rating was questioned. The four flagged groups got corrections funded from a separate reserve, upward only. Three of 24 submissions came back, all for a blank reason on a zero award rather than a number anyone disputed. Every brief says which pot funded what.
Is this a pay equity audit?
It is the in-cycle version: does this proposal, taken together, widen something no individual recommendation created. Federal contractors must evaluate compensation systems for gender, race and ethnicity disparities (41 CFR 60-2.17). A full study looks backwards and is a pay equity analysis. This looks at money not yet committed.
What happens to job groups too small to check?
The count is reported, the words below threshold appear, and nothing else. No differential, no direction, no ratio. Nineteen of 31 groups fell below a stated threshold of six here, covering 89 people, and all nineteen are named so next cycle's owner does not assume they were cleared.
How is a correction priced?
To the bottom of the comparator range, not to the midpoint. Priya's comparators sit between 98 and 109 percent of midpoint, so the target is 98.0. Midpoint costs roughly three times as much and creates a new outlier somebody explains next April. Levels come from the job description.
Why does every zero award need a written reason?
Because the row is the record, and employment records covering pay rates have to be preserved (29 CFR 1602.14). Budget is not a reason. Nine of 41 zeroes came back for a blank, and four of those nine became small awards once somebody had to write the sentence.
What about someone hired just after the cut-off?
They are out of the cycle and they will ask, so the guidance answers it before allocation opens rather than in the room. If their starting base already looks low, it goes on the correction list rather than being worked around. Starting records come from onboarding.
Find out what your cycle does to band position
Send payroll, the band structure with midpoints, ratings and the budget. The first thing back is every eligible person as a position in band, and the count of job groups where the proposal as submitted widens a differential.
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