algo-hr-compensation

# Compensation Benchmarking ## Overview Compensation benchmarking compares internal pay levels against external market data to assess competitiveness. Uses compa-ratio (actual pay / market midpoint) and percentile positioning. Informs salary band design, pay adjustments, and equity analysis. ## When to Use **Trigger conditions:** - Evaluating whether current salaries are competitive with the market - Designing or updating salary bands and pay structures - Identifying pay equity gaps across demographics or roles **When NOT to use:** - For individual performance-based pay decisions (use performance management) - When no market data is available (need at least survey benchmarks) ## Algorithm ``` IRON LAW: Benchmarking Is Only Valid With COMPARABLE Jobs Matching by job TITLE alone is unreliable — "Senior Engineer" means vastly different things at different companies. Match by: job content (duties, scope), level (IC vs manager, experience band), industry, geography, and company size. Poor job matching produces misleading market rates. ``` ### Phase 1: Input Validation Collect: internal compensation data (base, bonus, equity), market survey data (P25, P50, P75 by role), job matching between internal roles and survey benchmarks. **Gate:** Jobs properly matched, survey data current (< 18 months). ### Phase 2: Core Algorithm 1. Match internal jobs to market benchmarks by content, level, and scope 2. Age survey data to current date: apply projected market movement rate 3. Comp...