Legitimate differences and unjustified differences
Relevant tenure, sustained performance, role criticality, and market scarcity explain defensible differences. When the analysis controls for those factors and a systematic difference between groups still remains, that's the unexplained gap, and that's the one that must be corrected.
The analysis must withstand an uncomfortable question
The diagnosis has to withstand the question from a board member or a labor authority: why does this person earn what they earn. A simple statistical model with documented factors and recorded exceptions is enough to answer.
- Control for level, family, geography, performance, and relevant tenure
- Quantify the residual gap by group
- Record approved exceptions and their justification
- Prioritize correction by cost and calendar, in waves
Correcting without derailing the budget
Closing every gap in a single cycle is usually unviable. The workable practice is to allocate a specific equity budget within the annual raise pool, address the highest-risk cases first, and prevent new hires from reopening the gap.
Key takeaways
- The explained gap is documented; the unexplained one is corrected.
- Every approved exception must be recorded with its reason.
- Correction is budgeted in waves, within the annual raise cycle.
NS frameworks and reference sources
- Proprietary NS framework · RA·NS — methodological notes from the Compensation and Performance practice
- NS project base: anonymized cases by sector and geography
- Open market evidence and academic literature, recalibrated with client data
- WTW (Willis Towers Watson) — Salary Budget Planning Report
- OECD — Gender Wage Gap statistics
- Mercer — Global Talent Trends / Total Rewards
This article develops proprietary NS Business Strategy frameworks, drawing on our project base and on public industry literature and studies cited above. Figures are reference ranges; each project is measured against the client's actual data.