Creating a compensation model

After successfully importing your data and reviewing it in the system, the next step is to understand your pay structure and its impact on pay across different employee groups. By including the objective factors that drive pay into your compensation model, the analysis results will reveal your pay structure and identify any pay equity issues.

This might be a repetitive process, where you will come back to run a new analysis with different variables. You can continue practicing until you've developed a robust compensation model.

Follow these three steps to build your compensation model:

1. Once you’ve uploaded or selected your data set, in the Overview page, click the yellow Run Analysis button in the top right corner. The Run analysis settings page is opened.

2. In the Compensation model settings you should define the compensation model that you want to analyze by configuring the following fields:

   • In the Demographic Variables, select the demographic variables whose pay gap(s) you want to measure. For instance, the gender pay gap, the ethnicity pay gap, or the intersection of gender and ethnicity pay gap.

     You can control the reference group against which the system measures the pay gaps. If the reference group is left to the default value (automatically select), it will be the group with the average highest compensation. For more information, see Reference groups.

   • In the Compensation field, select the pay component on which you want to measure the gap, such as total compensation or base salary.

   • Check the Subgroup analysis box to run a subgroup analysis. This can be useful if pay structures vary significantly across groups (country, locations, entity, etc.). For more information on how and why you should run a subgroup analysis, refer to Subgroup analysis

   • In the Variables to use selection, select the variables you want to use to explain differences in pay. A variable can be categorical (such as education or job role) or numerical (such as number of direct reports or hours worked). For more information on variables, refer to Commonly used factors in Pay Equity Analysis

3. Unselect the Compute raise suggestion box in the Set pay equity target section for now. We’ll get back to this step of analysis later, once you know your pay equity issues (Adjusted pay gap) and are ready to remediate the problems (reduce or close the gap).