When faced with a pay discrepancy issue, what should HR evaluate first?

When addressing a pay discrepancy issue, it is crucial for HR to first evaluate internal reward alignment. This involves looking at how compensation structures are configured within the organization, ensuring that they align with established job grades, roles, and performance metrics. Analyzing internal alignment allows HR to identify whether the pay differences are justified based on the roles, responsibilities, and performance expectations of the employees involved.

Understanding internal alignment also highlights whether there are inequalities in pay for similar positions, which can uncover issues of bias or inconsistencies in pay practices. Before considering external factors such as employee external compensation or market trends, which can shift and may not fully reflect the organization's compensation philosophy, internal alignment provides a foundational understanding of how the company's existing pay structure functions. By starting with internal alignment, HR can develop a comprehensive approach to addressing pay discrepancies that considers equitable treatment of employees within the organization.