Seventy-one percent of comp leaders worry that they’re overpaying or underpaying employees today. That was one of the live poll results from a recent Syndio webinar. Dr. Shonna Waters, SVP of Executive Engagement and Insights at Syndio, and Nancy Romanyshyn, Senior Director of Total Rewards Strategy and Solutions, spent the hour unpacking. They discussed the lengths leaders go to provide the right guidelines for pay decisions, but those guidelines fall short and the margins of error add up to real costs. Here are five takeaways from their conversation.
1. The real problem isn’t pay equity. It’s the pay decisions nobody’s watching.
A decade of pay equity work taught Syndio something the industry didn’t expect. Pay equity gaps are a symptom. The cause sits upstream, in the individual decisions made every day without guidance or visibility.
“We design programs, we have every intention of paying people fairly, and yet somehow we don’t,” Romanshyn said.
That’s because pay decisions get made every day without the level of guidance or visibility organizations assume is in place. Every pay equity analysis eventually surfaces those gaps, and every remediation cycle pays to fix what governance would have prevented.
The live polls confirmed how widely this is felt: 71% of attendees said under- or overpaying affects their compensation program today. Fifty-four percent flagged compression, another 54% flagged a weak link between pay and performance.
As an organizational psychologist who has spent 25 years building the measurement systems behind good decisions, Dr. Waters works from a conviction that most people problems turn out to be system-design problems.
Pay is no exception. The gaps come from a system that never made the impact of decisions visible in the first place.
2. Two candidates, one salary range, and no way to explain the gap
Romanshyn walked through a scenario she sees constantly. Two Systems Engineers, hired two months apart, both landing near the midpoint of the same salary range. One at $155,000. One at $135,000. Both technically in range.
There may be a good reason for the difference. Maybe there was a counteroffer, or a scarce skill in the mix. Or, as is often the case, a hiring manager was working against a deadline with a recruiter deferring to the team’s needs. But if nobody captured the reasoning at the time, the reason is gone by the time anyone thinks to ask. It’s a pattern Syndio sees across compensation analyses for global enterprises.
“When you just look at pay decisions side by side like this, you don’t have context,” Romashyn said. “That tends to be what you see many months later when you’re auditing the decisions made. You have no documentation, no record of the reasoning, and the worst part is you can’t answer the questions of ‘Were they justified?’ and ‘Were they fair?’”
3. Compensation budgets govern the total. The individual decision goes ungoverned.
“It’s not that we’re totally without governance,” Dr. Waters said. “We have the salary bands, we have merit budgets, but they’re governing the envelope and not the decision that’s made inside of it.”
In the two-candidate example, the range runs from $116,000 to $174,000. That’s a 50% width, narrower than the 80% to 100% structures Nancy designed for most of her career. By her own standard, it isn’t a wide range. Measured against a single hiring decision, it is. Wide enough for a $20,000 difference between two people in the same role, with no record of why.
Syndio’s webinar poll bore this out. When asked what gets taken into account when setting the annual compensation budget, attendees said:
- the annual increase budget (94%)
- market adjustments (59%)
- a pay equity budget (42%)
- other adjustments (28%)
Companies don’t budget for different categories of pay decisions in a consistent way, and connecting an individual decision back to the aggregate is harder still. Both challenges lead to the same result: compression, over- and underpayment, and weak pay-for-performance linkage.
4. Pay is the biggest investment most companies make without a business case
Compensation typically runs 50 to 70 percent of operating costs. Commitments of that size anywhere else in the business, such as M&A, capital expenditure, R&D, come with a business case, an approval chain, and a review. Pay rarely does.
“Pay is the largest controllable investment that most companies make, and it’s the one decided without a business case,” Dr. Waters said.
The cost compounds quietly. Roughly 30% of new hire offers land above the organization’s internal equity range by about 8%, according to Syndio’s research on the cost of ungoverned pay decisions. On a $100,000 salary that means an $8,000 premium, the kind of variance a finance team notes and moves past. Apply a standard 3% annual merit increase and it doesn’t stay $8,000. It accumulates past $42,000 over a five-year tenure, all traceable to one offer decision that took 15 minutes and was forgotten by the next quarter.
Syndio customers who have closed that gap show the other side of the ledger. One health insurer with 100,000 employees put real-time guidance in front of more than 200 recruiters at the point of offer. Offer acceptance rose 6%. Remediation spend fell 25%. Time to fill dropped 6%.
Across governed organizations, pay gaps have come down more than 70%.
As Dr. Waters puts it, the financial and talent outcomes move together. That combination is what makes the case land with a CFO and a CHRO at the same time.
5. Pay governance starts with connected data
“You can’t change what you can’t see,” Dr. Waters said, borrowing a line from her previous coaching work. “At the heart of it, you can’t govern what your data won’t connect.”
The reasoning behind a pay decision is rarely written down. Pay, performance, and attrition sit in systems that were never designed to talk to each other. So nobody can see whether the decisions an organization makes match the strategy it set. Syndio’s research names this as a data infrastructure problem rather than an execution problem. That matters more now that AI is entering compensation work, because a model is only as good as the data underneath it. Point one at disconnected data and you scale bias and automate the guessing you were already doing.
It’s a matter of precedent. Sarbanes-Oxley didn’t start with judgment. It started with a system of record, because you can’t certify a number that you can’t trace. Companies had to connect the financial data first, and governance followed the foundation. Pay is at that same point now.
Dr. Waters’ advice on where to start is deliberately small, and it doesn’t require a platform decision or a budget cycle. Pick one decision that repeats — new hire offers, for example — and try to reconstruct why each one landed where it did. Not the band it fell into, but the reasoning behind it. If that reasoning lives in an old email or with a manager who has since left, you’ve found where to build first.
Watch the full conversation
In the webinar, Syndio’s pay experts Dr. Shonna Waters and Nancy Romanshyn cover:
- The metrics that translate between CHRO and CFO;
- The outcomes organizations are seeing from pay governance; and
- An Executive Conversation Kit covering who to engage, when to bring them in, and what to say when you get challenged.
The information provided herein does not, and is not intended to, constitute legal advice. All information, content, and materials are provided for general informational purposes only. The links to third-party or government websites are offered for the convenience of the reader; Syndio is not responsible for the contents on linked pages.
