How to Create Pay Equity in Your Business: Tools and Templates for Employers

Aug 28

2 min read

Pay equity is more than a legal obligation it’s a reflection of your values as an employer. When compensation decisions are inconsistent or unclear, it creates mistrust, turnover, and potential legal risk. But when handled intentionally, pay equity builds transparency, supports retention, and strengthens your employer brand.

Here’s how small and mid-sized businesses can take meaningful steps toward pay equity in 2025 without getting buried in complexity.

What Is Pay Equity?

Pay equity means compensating employees fairly for performing similar work, regardless of gender, race, age, or other protected characteristics. It’s not just about equal pay for equal work it’s about evaluating the fairness of your entire pay structure and decision-making process.

Why It Matters

Legal Compliance: Federal and many state laws prohibit pay discrimination. States like California, Colorado, New York, and Minnesota have taken this even further with pay transparency and audit requirements.
Employee Trust: Inconsistent or unclear pay decisions erode morale. Pay equity shows your team you value fairness and integrity.
Retention & Attraction: Top candidates care about how you treat people. Competitive and equitable pay supports both hiring and retention.

Where to Start

1. Conduct a Pay Equity AuditA simple internal review can reveal if disparities exist. Look at:

Roles with similar responsibilities
Pay by gender, race, tenure, and department
Starting salaries vs. current pay
Promotion and raise patterns

🛠 Need help? We have a Pay Equity Audit Template you can adapt for your team - ask us!

2. Build Salary Ranges for Each RoleCreating clear ranges based on market data brings structure to your decisions. A good range includes:

Minimum (entry level or new to role)
Midpoint (fully proficient)
Maximum (high performance or years of experience)

You can benchmark roles using data from sites like:

SHRM Compensation Data Center
Salary.com
Payscale
Industry-specific surveys

📎 Tip: Create a simple Salary Range Template to keep this organized across roles.

3. Document Your Pay Philosophy Your pay decisions should tie back to something; company values, performance expectations, growth stage, or market competitiveness. Define:

How you determine starting pay
How and when raises happen
What role performance plays
How internal equity is weighed against market data

Put this in writing. It keeps decision-making consistent as your team grows.

4. Train Your Managers Even with clear policies, equity can break down in conversations. Train your leaders to:

Understand your compensation philosophy
Explain salary ranges confidently
Avoid offhand promises or biased assumptions

5. Review & Adjust AnnuallyPay equity isn’t one and done. Set a rhythm to review compensation across your business, especially after merit cycles, promotions, or rapid growth.

Let’s Make It Easier

If this feels overwhelming, you’re not alone. Most small businesses don’t have a dedicated comp team—but you still need a plan. At People Solutions Hub, we help businesses like yours: