How to Use Compensation Software to Identify Pay Gaps and Reduce Turnover

Compensation management software with pay gap detection helps HR and finance teams uncover inequities quickly, correct them confidently, and reduce avoidable turnover by strengthening trust.

The playbook is straightforward: start with a structured audit, visualize disparities with real-time analytics, benchmark against the market, and use AI to target subtle inequities—then communicate clear pay structures, monitor regularly, and enable managers to discuss pay openly. Platforms range from all-in-one HRIS suites to specialized pay equity software.

For global organizations, the ability to model localized pay and apply consistent policies is critical—Deel’s compensation management unifies localized ranges, currency handling, and pay equity analytics across 130+ countries to empower teams to take action at scale.

In this guide, we’ll go through how to leverage compensation software to identify pay gaps, giving you the insights you need to address them before they result in turnover.

Conduct a comprehensive compensation audit

A compensation audit is a systematic evaluation of pay structures, employee demographics, and salary data to detect wage discrepancies before policies are publicized. This first pass creates the foundation for equitable pay practices and defensible decisions.

Analyze compensation holistically—base pay, variable pay, job role and level, location, gender and other protected classes, tenure, skills, competencies, and performance. The goal is to isolate explainable differences and flag unexplained outliers for remediation. Pay equity platforms also create audit trails that support compliance reviews and consistent methodologies.

Compensation audit checklist:

• Data collection: salaries (base, bonus, equity), job architecture (role family, level), demographics (gender, race/ethnicity where lawful), location, tenure, performance ratings, skills/competency indicators.
• Analysis: run pay distributions by cohort, identify outliers and unexplained differences, segment by department and geography, and validate job leveling consistency.
• Documentation: preserve inputs, methods, and findings; maintain audit trails and decision logs for compliance and future reviews.

Use real-time analytics to visualize pay disparities

Real-time analytics in compensation are live dashboards and reporting tools that surface up-to-date pay disparities across groups, enabling faster, fairer decisions. Dashboards should make it easy to compare compensation by department, location, or job family and to flag outliers that require action; outlier identification tools and guardrails help prevent new gaps from opening during cycle planning. For design inspiration, many global enterprises standardize on analytics dashboards that highlight cohorts and variance thresholds.

Acting on issues as they emerge, rather than after annual audits, reduces risk and signals fairness to employees.

Integrate salary benchmarking for market competitiveness

Salary benchmarking compares internal pay to external market rates to ensure compensation is competitive and equitable. Many compensation platforms integrate market data feeds and generate comparisons by role, level, and location, allowing you to calibrate pay ranges and reduce turnover risk from below-market offers.

Practical steps:

• Gather benchmark data from reputable industry surveys and government sources; align with your job architecture.
• Use analytic tools to define consistent, location-adjusted compensation ranges and guardrails for offers and promotions.
• Calibrate to the market, adjusting ranges to close gaps or prevent above-market overspend that strains budgets.

For distributed teams, integrate location factors and currency rules so ranges remain consistent across geographies; Deel’s salary benchmarking guidance outlines how to operationalize this globally. Try out our free salary benchmarking tool.

Leverage AI-driven insights to detect equity gaps

AI-driven compensation analytics apply machine learning and statistical controls to automate wage analysis, account for variables like experience, performance, and location, and surface subtle equity gaps traditional audits can miss. Real-world results are compelling: Unilever’s AI salary recommendations cut turnover by 15% and improved pay precision by 30%.

How it works in practice:

• Data ingestion: salaries, total rewards, job/level, location, tenure, skills, performance, and promotion history.
• Fair controls: models account for non-biasing factors (e.g., experience, location) to isolate unexplained variance.
• Recommendations: prioritized adjustment lists, budget impact modeling, and scenario planning to close gaps efficiently.

Develop and communicate transparent pay structures

Pay transparency is the practice of openly sharing compensation frameworks, salary ranges, and pay policies to build trust and fairness. Use analytics and benchmarking to define clear salary bands by role and level, then communicate ranges and progression criteria internally.

Global teams should translate ranges into local currencies and clearly note geographic differentials; Deel’s compensation management platform supports localized bands with consistent rules and auditable workflows.

Monitor and update compensation regularly

Compensation analysis isn’t a one-off exercise. Use your software at least annually—ideally before planning or restructuring—to proactively identify and fix pay gaps, and maintain audit trails to document changes. Achieving complete pay equity is a long-term commitment that benefits from continuous monitoring and alerts as workforce and market conditions shift.

Recommended cadence:

• Annual or semi-annual pay equity reviews and range recalibrations.
• Quarterly pulse checks with automated notifications on emerging outliers.
• Post-cycle validation to ensure merit, promotion, and hiring didn’t open new gaps; workflow automation is common in modern compensation solutions.

Empower managers to discuss compensation openly

Managers shape employee perceptions of fairness. Train them to recognize bias, explain pay decisions using consistent criteria, and guide growth conversations. Equip managers with role histories, current range positions, market context, and pay equity indicators so they can credibly answer “why” and “what’s next.” Compensation discussion guides and communication templates embedded in your HRIS help standardize dialogue and reduce risk; Deel’s HRIS centralizes this data for manager-ready insights.

Collect and use employee feedback on pay practices

Feedback closes the loop and builds trust. Offer anonymous channels—pulse surveys, suggestion boxes, open office hours—so employees can share perceptions about pay. Feed results into your compensation analytics to spot patterns by cohort or location, and report back on actions taken.

Continuous feedback loop:

• Collect anonymous feedback.
• Analyze signals alongside compensation data.
• Prioritize issues; model fixes and budget impact.
• Communicate decisions and timelines.
• Reassess sentiment and iterate.

Compensation management with Deel

Streamline and elevate your compensation strategy with Deel — the all-in-one platform trusted by thousands of companies around the world.

• Centralized compensation workflows — Replace spreadsheets with a structured, auditable planning process that scales across teams and locations.

• Faster review cycles — Speed up compensation reviews and stay on budget with guided workflows and approvals.

• Data-driven decisions — Leverage global salary insights and benchmarking to stay competitive across 150+ countries.

• Pay transparency and compliance — Stay ahead of pay transparency regulations and manage access to compensation data easily.

• Seamless platform integration — Work in the same platform you run payroll and HR, reducing manual work and errors.

Ready to transform your compensation strategy? Book a 30-minute demo and see Deel in action.