Pay Equity Audit in 30 Days: A Repeatable Methodology

Pay equity is no longer optional. The EU Pay Transparency Directive (in force from 2026) requires employers >100 to publicly report gender pay gaps and trigger 'joint pay assessments' if the unexplained gap exceeds 5%. The UK has required gender pay gap reporting since 2017. Multiple US states (NY, CA, CO, WA) require pay range disclosure in job postings. Whether or not you are legally required, an annual pay equity audit is now a baseline of competent people operations.

Why this matters now

The 30-day framework

1. Days 1–5 — Scope: which legal entities, currencies, populations, what protected classes (gender minimum; add race/ethnicity where data is available and lawful).
2. Days 6–10 — Data: pull compensation, demographics, role, level, location, tenure, performance.
3. Days 11–15 — Clean: validate level assignments, currency normalization, FX rates, FTE conversion.
4. Days 16–22 — Analyze: run regression by job family + level, calculate raw and unexplained gaps.
5. Days 23–26 — Review: HRBPs + leaders review individual flags for legitimate reasons.
6. Days 27–30 — Remediate + report: budget adjustments, communicate to leadership, document methodology.

Data preparation

• Base pay annualized, FTE-adjusted, single currency.
• Total compensation variant: base + bonus + equity grant value.
• Level / job family / location — the three biggest legitimate drivers.
• Tenure and performance rating — secondary explanatory factors.
• Protected class: gender always; race/ethnicity where lawful (illegal to collect in some jurisdictions).
• Exclude leadership team if too small for statistical significance; analyze separately.

Regression methodology

Interpreting results

Remediation playbook

1. Identify flagged individuals — typically those >5% below predicted pay for their cohort.
2. Manager review — is there a legitimate explanation (recent hire, performance, role change)?
3. Budget the remediation — typical companies find 0.1–0.5% of payroll fixes most flagged cases.
4. Adjust quietly, all at once — not as a 'campaign' that signals last year was unfair.
5. Re-run analysis post-remediation — confirm unexplained gap is now within tolerance.
6. Embed in annual cycle — re-audit at every comp cycle and after major reorgs.

Communications

• Leadership briefing — methodology + results + remediation plan, before any wider comms.
• Manager memo — affected manager learns first, can deliver adjustment in 1:1.
• Employee adjustments — delivered privately, not as a public memo.
• Workforce-level — annual statement on pay equity (required reporting in many jurisdictions).
• Stakeholders / regulators — formal filings per jurisdiction.

Making it ongoing

• Add a pay-equity check to every offer above level X — comparator pull + ratio check.
• Add a check to every promotion + raise cycle.
• Annual full audit + quarterly mini-audit of new hires.
• Pay bands published internally — bands are pay equity's best preventive control.
• Vendor option — Syndio, Trusaic, PayScale, Mercer for automation at scale.

References