The end-to-end compensation review cycle: a 12-week operating manual
From budget approval to letter delivery, the comp cycle is 12 weeks of dependencies. Here's the week-by-week playbook with the four roles (Finance, Comp…
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- 12 weeks is the realistic minimum. Anything less means managers ad-libbing decisions in week 11.
- Lock the budget in week 1. Every change after week 3 is a 2-week delay.
- Calibration is the cycle. The merit math is the easy part.
- Letters land same day across the company. No exceptions for 'I need to talk to them first'.
The comp cycle is where HR's operating maturity becomes visible. Done well, it's invisible. Done badly, it produces three months of manager grievance, two retention regrets, and one lawsuit risk. Here's the operating manual.
The 12-week timeline
| Week | Activity | Owner |
|---|---|---|
| 1 | Budget approved by CFO; merit %, promo %, equity refresh % set | Comp + Finance |
| 2 | Comp philosophy + guidelines refreshed; bands re-checked vs market | Comp |
| 3 | Manager training: how to write a recommendation, how to use the tool | Comp + HRBP |
| 4-6 | Manager recommendations entered: merit, promo, equity refresh | Managers |
| 7 | HRBP first-pass review per team; flag anomalies | HRBP |
| 8 | Calibration rounds at team → function → leadership level | HRBP + Function leads |
| 9 | Adjustments locked; pay equity audit pass on final dataset | Comp |
| 10 | Letters generated; legal review; CEO approval of any outliers | Comp + Legal |
| 11 | Manager prep: scripts for promo, no-change, regrettable | HRBP |
| 12 | Delivery day; manager conversations; HR escalation channel open | Managers + HR |
Four roles, named owners
- 1FinanceOwns the dollar budget. Accountable for tracking actuals vs plan.
- 2CompOwns the structure: bands, philosophy, math, tool, audit. Accountable for equity outcomes.
- 3HRBPOwns the manager experience and the calibration room. Accountable for consistency across teams.
- 4ManagerOwns the per-employee recommendation and the delivery conversation. Accountable for the rationale.
The math: merit, market, equity
- Merit: tied to performance rating × position in band. Higher performance + lower in band = bigger %.
- Market: separate adjustment for employees below band midpoint regardless of performance. Funded outside the merit pool.
- Equity refresh: tied to performance + tenure. New-hire grants ≠ refresh grants. Refresh smooths the cliff.
- Promo: market move, not a merit move. Funded from a separate promo pool with separate guidelines.
Calibration discipline
Calibration is not 'managers defending their ratings'. It's 'leaders looking across a population and asking: is this distribution defensible to a regulator, a candidate, and the people in this room?' If everyone is a 4, you're not calibrating.
Delivery day mechanics
- Same-day delivery across the org. No leaks.
- Manager script for each scenario: promo, strong, on-plan, below-plan, no change, regrettable.
- HR escalation channel staffed all day.
- Letters in writing within 24h.
- Post-cycle survey: managers + employees. Use to refine next year.
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