SHRM26 Debrief · Compensation & Benefits · #1639
The Pay Shift: Turning Compensation Data into a Competitive Advantage
with Carrie Cavanaugh
"The market position you take is a choice, not an accident."
What it was about
Compensation decisions should flow from a deliberately chosen, documented pay philosophy built on market data, internal equity, and turnover data rather than ad hoc reactions, and that philosophy must be communicated transparently to employees so pay feels fair even when it isn't equal.
By the numbers
average tenure now ~4 years vs. ~2.5 years around COVID
employee tenure trend
10%+ gap to market
threshold the speaker treats as a critical pay gap requiring immediate correction
~85%
'real' labor participation rate for ages 25-54 who are working
Key notes
- Create a written compensation philosophy that ties pay progression to skills, impact, and accountability rather than letting the 'squeaky wheel' or manager whim drive raises.
- Benchmark all roles (not just 65%) the first time, and re-benchmark regularly since some roles (IT, accounting/finance, water/wastewater operators) move faster in the market than others.
- When fixing a market gap, calculate the size of the gap (under 5%, 5-10%, over 10%) and prioritize fixes by severity and by turnover/retention risk rather than applying a flat across-the-board raise.
The contrarian takeIt's okay, and sometimes correct, to be an intentionally below-market payer (e.g., governments, or employers that lead in benefits instead of pay) as long as you're transparent and strategic about that choice. The goal isn't to win on pay everywhere, but to own your market position deliberately.
Take this back Monday
Do this for your team
Draft a one-page pay philosophy explaining how raises tie to skills and impact, not tenure or manager whim, and share it.
Say this in your next leadership meeting
Our pay position should be a deliberate, documented choice backed by market data — not an accident or a series of ad hoc raises.
Watch out for
- Applying a flat percentage raise across the board every year without checking for internal equity or compression, which lets some roles drift far above or below market over time.
- Using tenure as a proxy for value, which can produce absurd outcomes like a long-tenured employee earning far more than the role is worth (cited: a $75,000 receptionist).
- Creating fake job-title tiers (e.g., 'groundskeeper level 2/3') just to justify a raise instead of having the harder conversation about role design and pay ranges.
Fun fact · Carrie Cavanaugh
She's built and run HR departments for companies ranging from just 50 employees all the way up to 30,000.
If this landed, see these
↳ Go deeperFair Pay, Lean Resources: Compensation Strategies for Small & Midsize HR TeamsGives small HR teams the repeatable four-lens framework for building the pay philosophy this session says every org needs.⇄ The counterpoint2026 Annual SHRM Employee Benefits Survey ResultsSuggests pay strategy might not be the biggest lever right now: GLP-1 and healthcare cost pressure are reshaping the whole benefits budget first.✦ The unexpected oneEverything I Know about Solving Today's HR Problems – I Learned from My DogConnects pay transparency to a bigger claim: most workplace dysfunction, including pay complaints, traces back to a trust problem, not a pay problem.