Pay Transparency in Practice: How to Build a Clear Pay Structure

A clear salary structure is the foundation of pay transparency. This article shows how to organize roles, levels, and ranges so that you have a workable and defensible compensation system.

Why pay structure is the first real step

Many organizations start the pay transparency conversation with the question “should we disclose salaries?”. A more useful question is this: “do we have an internal structure that explains why a salary is what it is?” This is where the difference between formal compliance and real readiness becomes clear.

When preparing for Directive (EU) 2023/970, an employer needs an organized logic: how roles are grouped, how levels are defined, how an employee moves within a range, and when differences are justified. Without such a structure, pay transparency remains a declaration rather than a working process.

What a salary structure is

A salary structure is the internal framework that organizes roles and compensation into logical groups. It usually includes levels, job families, pay ranges, placement criteria, and rules for movement between levels. A good structure is not overly complex, but it is clear enough to be used by HR, managers, and employees.

It serves several purposes: more fair offers, more consistent raises, easier comparison between roles, and better justification in questions about equal pay and work of equal value.

How to organize the roles

The first step is to review roles by content, not just by title. Often the same function has different names across departments, which makes comparisons difficult. It is useful to analyze core responsibilities, required knowledge, autonomy at work, impact on results, and managerial weight.

This helps form groups of positions that can be compared. This is important both for internal fairness and for preparation in the event of an analysis of differences in pay between women and men.

How to define salary ranges

A salary range is the boundary within which compensation for a given level or group of roles can move. It should allow enough space for differences related to experience, expertise, and performance, but not so much that it creates chaos and unexplained gaps.

A practically good approach is to base ranges on market data, internal role evaluation, and budget capabilities. However, it is important that an equally important role does not receive dramatically different offers without a clear explanation. When that happens, problems usually arise both with transparency and with team motivation.

Criteria for placement within the range

For the structure to work, it must be clear why someone starts closer to the lower end while another starts higher in the same range. Objective criteria usually include relevant experience, specific technical skills, certifications, task complexity, language proficiency, team management, and previous results in a similar role.

It is important that these criteria are formulated in advance and applied consistently. If they are used only after a question arises, the risk of inconsistency is high. Pay transparency requires rules that are known and predictable.

Movement within the salary range

Equally important is the question of how an employee moves within the range. Will there be annual reviews, performance assessments, merit increases, or changes due to expanded responsibilities? If these questions have no clear answer, the salary structure will not work sustainably.

A practical approach is to combine several elements: performance review, skills development, and market review. In this way, increases are based on logic rather than chance or solely on individual negotiation.

How to avoid artificially complex models

Some companies create overly detailed systems with many levels, exceptions, and additional conditions. The result is that no one uses them confidently. When preparing for the directive, it is more useful for the structure to be simple enough to be explained to employees and managers, and tight enough not to create arbitrariness.

If a system cannot be explained in three or four clear steps, it is probably too heavy. This is especially true for companies that want to build trust and consistency in compensation management.

Practical example

Imagine a twenty-person team in an IT company that includes account managers, customer success specialists, and implementation consultants. The titles are different, but some of the roles have similar requirements in communication, coordination, problem solving, and impact on customer satisfaction. Without a common framework, salaries are often determined for historical reasons.

When structuring the roles, these positions can be grouped into two or three levels with clear ranges. This will make it easier for the employer to explain why one role is positioned higher, how compensation moves, and how unjustified differences between employees in similar functions are avoided.

What to include in the internal policy

description of each role group;
criteria for assessing complexity and responsibility;
salary ranges or principles for defining them;
rules for starting offers and compensation reviews;
justification of bonuses and additional payments;
procedure for exceptions and approval;
roles of HR, managers, and leadership.

How this helps with equal pay

When the structure is clear, it becomes much easier to see whether there are unjustified differences between people in equivalent positions. This is directly linked to the principle of equal pay and the assessment of work of equal value. Instead of relying on intuition, the organization has a framework that enables comparison and justification.

This is especially useful when questions arise about differences between women and men in similar or comparable roles, because the discussion shifts from general claims to specific criteria and data.

How to introduce the change without disruption

There is no need to change the entire system overnight. A better approach is a pilot introduction in one or two departments, followed by a review of the effect and a gradual expansion. This avoids unnecessary tension and gives managers time to understand the new logic.

Communication to employees must also be clear: the new structure is not aimed at mechanical uniformity, but at a fairer and more predictable management of pay.

What to do right now

Make a list of all roles, group them by content, and check whether you have clear salary ranges. If you do not, start with a rough framework that can be improved. Review the internal rules for raises, bonuses, and promotions as well. For a broader context, also see the main guide to Directive (EU) 2023/970 and the article on The Most Common Mistakes Employers Make When Preparing for Pay Transparency

Conclusion

Pay transparency starts with structure. If roles, ranges, and criteria are organized, the employer will much more easily meet the requirements of Directive (EU) 2023/970, reduce the risk of unjustified differences, and build greater trust in its compensation system. This is not just a legal exercise, but a foundation for more mature people management.