written by
Michele Heyward

Ways HR Analytics Can Help With Salary Management

Work 3 min read
“Pay analytics is a fairly new focus within people and HR analytics. It involves data-driven decisions regarding fair pay for all employees and centers around the effectiveness and optimization of employment costs. This is why, it has the most importance for diversity, equity, and inclusion.”

Depending on how compensation is designed, it can have a positive or negative influence on an organization’s culture. A study by CEB Analytics found that when organizations lead in HR analytics, their talent outcomes improved from 4% to 12% in gross profit margin. Being strategic about rewards and optimizing salaries can also help build and retain a strong and diverse workforce and maximize productivity for all.

So, how can you use people analytics for compensation management especially when you want to hire and maintain a diverse workforce? Here are some ways you can do that:


The wage gap is a major concern across the industry in the United States. At the current rate, The World Economic Forum estimates that it will take at least 202 years to close this gap. With the help of compensation analytics, you can find out the stats for how pay varies across various job roles, gender, races, age groups, and ethnicity among other employee demographics.

Use these analytics to find answers for significant issues like variation for pay within different ethnic groups, the difference in pay within salary based on age and tenure, and the comparison of salary increases for male and female employees. If you find any data which indicates discrimination, analyze the data further to find identify causes for the discrepancies. If your findings indicate bias and/or discrimination, present them to the upper management team or decision-makers in your organization.

Salary gaps are a major reason for attrition rates. If you do uncover bias in pay this may indicate the reason why it’s difficult to hire or retain a certain group of employees.


With compensation management using analytics, you get clues into various factors that affect the performance of an employee. You can use these to gauge how the experience of one employee can differ from the experience of another in a similar role. This is even more important for diverse employees because you will be able to find the telltale signs of bias, discrimination, and even being underpaid when compared to their counterparts.

These analytics help you find star employees that you might lose because of poor pay. With the help of the right information, you can be tactical with pay decisions, salary negotiations and focus more on rewarding and retaining the right talent. It will have a direct impact on the business sales and growth as well.


Organizations determine the market rate by salary benchmarking. With the help of data and analytics, HR professionals can identify gaps in their compensation structure. This is essential for diverse employees because of bias in the pay structure. With the help of HR analytics, the gaps can be filled appropriately which will eventually lead to reduced risk in talent loss. This in turn will help the organization overcome the cost of hiring, loss of productivity, and recruiting new talented employees for vacant positions. It is a long-term retention strategy as well.


The compensation data strongly impacts employee motivation. When the organization's goals and efforts are made visible to all the employees, you get a sense of how pay equity impacts them. Employees feel a sense of fairness and unity among each other. Some companies also publish external salary and cost of living benchmarks for their employees. With this information, the HR team can make effective salary adjustments and be true to the location’s market rate. Moreover, the employees can also understand why their compensation differs from their counterparts across the country and it also proves accountability.

“Compensation management with the help of HR analytics can have the biggest impact on recruiting and retaining diversity in the organization. Keeping diverse employees includes equal pay and is strengthened by pay equity. The business case for DEI has been long proven but compensation management will strengthen it for you.”
Workplace Career Advancement WoCinSTEM Career STEM