Pay compression is what happens when the labor market moves faster than your merit budget: starting rates climb to land new hires, and suddenly the five-year veteran makes eighty cents more than the person they're training. Nobody announces it. It surfaces as a resignation, a refused promotion, or — when compression tracks protected classes — a pay equity claim.
This worksheet makes compression visible and rankable: a role-family data table with compa-ratios and newest-hire rates side by side, six compression indicators, a four-factor risk score that tells you which compressed employees to fix first, root-cause identification, a funded correction plan, and an equity screen so the fix doesn't create the next problem.
Who should use this compensation worksheet
- Employers who raised starting pay in the last two years
- HR leaders building a merit budget that has to fix something real
- Operations managers whose leads earn less than their overtime-eligible crews
- Municipalities and nonprofits with rigid scales and hot labor markets
What it helps prevent
- Quiet resignations of your most experienced people
- Supervisors who refuse promotion because the premium isn't worth it
- Pay equity claims where compression correlates with protected classes
- Merit budgets spent evenly while the real problem sits in three roles
- New-hire offers approved with no view of who they'll leapfrog
What’s inside
- Part 1 — Role Data Table
- Part 2 — Compression Indicators
- Part 3 — Risk Scoring
- Part 4 — Root Cause
- Part 5 — Correction Plan
- Part 6 — Equity Screen
Before you process payroll, terminate, classify, deduct, or respond to a claim, get the decision reviewed.
Faulkner HR Solutions helps Texas employers, nonprofits, municipalities, and growing businesses fix the people systems behind recurring workplace problems. If this resource raised a risk flag, do not guess your way through the next step.