Beyond Benchmarking: a Values-Based Approach to Compensation Equity
For years, the question no one asked us was, “How do we make sure we’re paying people fairly?” The absence of compensation conversations left a conspicuous gap in equity efforts, highlighting a disconnect that often leads staff to doubt leadership’s commitment to change. Organizational leaders tend to assume that open discussion of pay threatens morale, but research shows the opposite: transparency in compensation increases trust and, if the compensation system is relatively fair, improves morale and employee effort (e.g. HBR, SHRM).
Recently, more organizations are recognizing that compensation is inseparable from equity, driven by new transparency laws and a broader understanding that fair pay is foundational to a healthy organizational culture. This year alone, we’ve worked with several clients who want to make sure their compensation systems not only feel fair but also concretely reflect their values. We also facilitated an internal process to revise Think Again’s own system.
In this post, we’ll unpack what compensation equity really means, why common approaches fall short, and concrete steps organizations can take toward fairer pay – even on a tight budget.
What we mean by compensation equity
At Think Again, we define equity as fairness that goes beyond equal treatment. Equity aims to enable equal outcomes by recognizing differences among people and responding to their specific needs.
In the context of a deeply unequal economy – where factors like family wealth, access to education, dis/ability, and historical inequities shape what’s possible – no single organization can guarantee equal outcomes for all staff. But organizations can structure compensation in ways that meaningfully support more equitable outcomes.
This means ensuring all staff are decently compensated, feel respected and valued, and can meet their needs. Small changes – like clarifying pay ranges, updating criteria for advancement, or offering targeted stipends – can make a meaningful difference. Larger changes – like reducing the wage ratio – can shift organizational culture and signal a deep commitment to equity.
Applying these principles in practice can look differently depending on each organization’s values, priorities, and context. To understand why Think Again’s tailored approach matters, it helps to first look at the limitations of conventional approaches.
What’s wrong with the usual approaches
Most HR consultants rely on two main tools for compensation equity: market benchmarking and parity studies. Both can be useful, but they fall far short of our understanding of equity.
Market benchmarking aligns pay with what is typical in a field and region. However, the market isn’t fair. Typical wages for different kinds of work developed in a profoundly inequitable context of workforce segregation by race, gender, and obviously class.
For example, janitors make between 3% and 20% more than housekeepers (BLS), despite performing similar duties. Historically, janitors have mostly been men and housekeepers mostly women, with racial patterns in some regions. The pay difference in these jobs reflects sexism, racism, and inequitable bargaining power – not fairness. Benchmarking against the market simply reproduces these inequities, letting organizations outsource responsibility for them: “It’s not our fault the market pays this way.”
Parity studies, which compare pay for people doing the same work, have similar limitations. They can ensure that men and women in the same job are paid equally, for example. But they don’t account for the fact that men and women often occupy different roles, with higher-paid positions disproportionately held by men. As a result, pay may be fair within each role, but overall inequities persist.
Both tools are valuable starting points, but organizations seeking truly meaningful equity in compensation need to go further.
Our approach
Think Again begins each compensation equity project by grounding the work in the organization’s own values. Because there’s no single “right” compensation structure, we start by asking: What does equity mean here? That includes the organization’s stated values, its culture, and staff members’ own sense of what feels fair. From there, we work together to build a compensation system that centers those core values while remaining grounded in the organization’s operational and financial realities.
How this process unfolds depends on where an organization is starting. In some cases, we collaborate with an internal working group to design their ideal compensation system – even if some changes can’t be implemented immediately. This can include:
establishing a living-wage floor for all staff
updating pay ranges
clarifying how staff are placed within those ranges
deciding which non-wage benefits to prioritize
developing need-based stipends or reimbursement programs
In other organizations, we focus on just one or two of those elements at a time. And when big changes are on the table, shared understanding and buy-in become essential – making learning and culture-building core parts of the process.
This approach yields concrete, measurable improvements. At New Hampshire Legal Assistance – a statewide agency providing free legal aid – we facilitated a participatory exploration of compensation equity that resulted in significant wage increases for the lowest-paid staff. As their executive director later shared, “The implementation went smoothly and well. I am especially grateful for the progress we made – both in recognition and compensation – for our paralegal advocates. I’m really happy with where we are and I think it is showing up in our morale and retention.”
Doing this same work internally at Think Again allowed us to have deeper conversations about our values, build a shared understanding of the budget, and strengthen trust across the team. Whether the changes are small or far-reaching, aligning compensation with clearly defined values improves retention, increases satisfaction, and ensures that the lowest-paid staff experience the organization’s values in their actual lives.
What’s next
If you’re beginning to think about compensation equity in your organization, a good first step is to take stock of your current system. Consider questions like:
What is your organizational culture around salary transparency? Do staff and leaders feel comfortable discussing salaries?
How consistent and logical are current salaries across similar roles?
When were salary ranges last reviewed, and according to what criteria?
How are compensation decisions made?
What is the overall mood among staff around compensation? Who feels satisfied, or dissatisfied – and why?
Your answers can point you toward the right starting point. You may find that your organization needs a total overhaul of its compensation system, or that it makes more sense to focus on one element at a time. For many organizations, the first step is building the culture and skills to talk openly about compensation; training and facilitated discussions can be invaluable for this.
If you’re ready to explore what compensation equity could look like in your context, we’d love to talk about how Think Again can support you.
