Making sure the price is right: How to conduct a comprehensive salary structure review

June 4, 2026

George Yang

Note: This article explores how to conduct a review of your existing salary structure (base pay). Check out additional articles from HCM Dialogue to learn more about total compensation and assessing financial/non-financial components of your compensation strategy.

Leading or supporting a pay grade review can be a challenging task. Knowing that your findings may impact the salaries of your colleagues in a positive or negative way can be a heavy load to carry. However, if you approach your wage structure review in a systematic way and ensure you remain objective, you can re-envision this work as an opportunity to maintain a fair and consistent standard of pay that strengthens transparency and trust across your organization.

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Why are regular salary reviews important?

It’s important to schedule a salary review on a regular basis for a number of reasons. First, it shows your employees that you are committed to paying them fairly for their work. Second, it alleviates pressure on managers to navigate conversations with employees. These conversations often come up during annual performance reviews, and equipping managers with information they can freely share about salaries can help manage expectations now and into the future. Lastly, money matters to all employees. If you avoid reviewing salaries and don’t remain competitive, you might find productive employees walk away to look for better opportunities elsewhere.

” Leading or supporting a pay grade review can be a challenging task ”

What to ask when your organization initiates a salary structure review

Once you’ve been given the green light by your leadership team to move ahead with a salary structure review, it’s necessary to ask a few key questions of clarification before jumping in. By asking these questions, you can direct the appropriate time, energy and resources into the task.

Why are we doing a salary review?
Always start by understanding your “why”. Whether it’s part of your annual process, required by law, a result of recent employee turnover or all of the above, defining the reason for the review will provide an important lens that may be helpful when you bring forward your recommendations.
Who should be included?
Salary reviews can vary in terms of which employees and positions are included. Ask whether your review applies to all, or only some, job levels, work arrangements (e.g., full and part time) and employees (e.g., unionized and non-unionized workers). Once you have this information, you can begin to understand the scope of your process.

What information is available?
To conduct a salary review, specific information will be needed across different process steps. This includes:

Compensation philosophy (i.e., does your organization want to be above, below or in line with market rates?)

- - Job descriptions, specifications and performance standards
  - Job evaluations (e.g., how valuable is each job to your organization?)

Salary ranges and additional benefits (like holiday time, etc.)

Employee pay data

If this information is unavailable or extremely outdated, you will need to update it before you can move ahead.

What time and resources are available?
You need to understand the schedule for completing the review and what resources are available to you. If you are faced with a large scope and minimal internal or external support, now is the time to revisit to make sure you or your team is not committing to a process that is set up for failure.

When and how would the leadership team like to be engaged in the review process?

It’s important to understand upfront how engaged your leadership team wants to be. Whether it’s receiving periodic updates or wanting to be actively involved in certain steps, you need to know these expectations to build them into your plan and process.

What process steps can guide your internal salary audit?

Once you’ve gathered the information needed to initiate the salary review, the following process steps will help you take a planned approach.

Step 1 – Review job analysis and job evaluation data: To determine a fair salary for all jobs, you need to understand the different components of each job and the skills needed to perform it. This will allow you to fairly compare your jobs to others using market data.

Step 2 – Gather market data: With a good understanding of your current jobs, you will now look to the external market to find comparable data on similar jobs. Depending on your industry, this could be a point where external suppliers lend a hand, or you may be able to access specific data for your industry, such as the below.

- Step 3 – Analyze pay data and salary ranges: Once you have information for comparison, analyze this data to determine if any changes should be considered. This includes assessing individual jobs and salaries to identify underpaid roles, over-market salaries, inconsistencies across departments and any pay equity issues.
- Step 4 – Review your salary structure: In this step, you will perform a more detailed review of the different elements of your salary structure, including the number of pay levels, the minimum and maximum pay at each level and employee placement within each pay level. This will show you whether your pay structure needs adjustment to align with market changes, support employee retention or reduce/eliminate overlap between levels.
- Step 5 – Model the financial impact: It is critical to do financial modelling to understand the impact to your bottom line associated with any proposed changes to your salary structure.
Step 6 – Share your findings and recommendations: With all your information gathered, you can share your findings and recommendations with your leadership team. This includes a summary of each step taken and your overall recommendations for any adjustments to the salary structure. It’s likely your leadership team will use this information to perform a deeper analysis and decide on which recommendations should move forward and the preferred approach to implementing them (e.g., retroactive, phased in).
Step 7 – Implement and monitor changes: Once final direction is given, changes to the salary structure can be rolled out carefully, giving consideration to updating key documents (e.g., salary ranges, payroll, policies), providing manager guidance and communicating clearly with employees.

While salary alone might not be the only way your employees assess their job satisfaction, it’s important to show them your commitment to providing a salary that is fair and competitive. While some may still feel undervalued for their contributions, you will at least be able to offer a clear explanation of where their salary fits within your pay structure. If you don’t, you run the risk of employees coming to their own conclusions about their pay and potentially sharing that misinformation with others.

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