Keri Thomson

For decades, location-based pay served as one of the most stable pillars of compensation design. Companies priced jobs by geography, using cost-of-labor differentials to calibrate salary structures. This worked well until hybrid work reshaped how, where, and why people work.

Compensation governance is one of the least discussed yet most essential pillars of a healthy pay system. Boards have governance. Finance has governance as do cybersecurity, ethics, and compliance. But compensation? In most organizations, it is a patchwork of informal norms, manager discretion, and loosely enforced guidelines. HR leaders feel the consequences of this every day.

Job architecture maintenance prevents title inflation and misalignment. Annual tuning keeps roles, careers, and pay on track.

Outdated job titles create confusion in hiring, pay, and career growth. Learn how misaligned titles erode talent strategy and why consistency matters.

Pay compression is almost never the result of one major event. It’s the accumulation of dozens, sometimes hundreds of tiny pay decisions made over years.

Most organizations will confidently tell you they have a “compensation strategy.” They may even have a slide deck explaining it. But when you look beneath the surface, what they really have is a collection of habits, legacy decisions, informal norms, and reactions to crises none of which add up to a coherent strategy.

Every year HR prepares the same message: merit budgets are tight, increases will be modest, and managers must differentiate performance within limited dollars. Leaders nod, managers try their best, and employees receive increases that barely register. The cycle repeats. What never changes is the assumption that merit increases motivate behavior.

Incentive plans launch with energy and optimism. Leadership believes they will sharpen focus, motivate employees, and drive performance. HR builds the plan, communicates the metrics, trains managers, and prepares year-one materials.