How to Conduct a Salary Review Process That’s Fair, Globally

Regular salary reviews are essential to the employee experience. They’re a key part of keeping pay fair and relevant, but they’re also one of the hardest processes to get right. When salary reviews happen without structure or transparency, the slightest mistake can lead to frustration and inequity. Some employees will leave if they don’t believe they’re receiving adequate compensation or don’t trust the process itself.

This guide looks at how to run salary reviews that make sense for employees, managers, and the business as a whole.

What is a salary review process?

A salary review is the process of evaluating whether employees are being paid fairly and competitively for the work they do. Linked inextricably with a company’s pay philosophy, a comprehensive salary review process brings together the following pieces of information so managers and HR teams can make informed pay decisions:

• Performance data
• Role scope
• Market benchmarks
• Internal equity

Objectives of a salary review process

A good salary review process should:

• Promote fairness and equity: Pay should always reflect individual contributions, yet be consistent across similar roles and levels.
• Stay competitive: The latest market data ensures the organization can attract and retain top talent workers based on industry standards.
• Recognize growth and performance: When an employee’s responsibilities or impact increase, their compensation should evolve too.
• Create structure and transparency: Clear criteria and steps prevent ad-hoc or biased decisions.
• Support engagement and trust: Employees are more likely to stay motivated and perform at their best when they understand and trust in how pay decisions are made.

When do salary reviews happen?

Salary reviews occur when there is a significant change in an employee’s role, in the market, or within the organization itself. Below are some of the most common triggers:

Promotion, scope changes, and lateral moves

When an employee steps into a new role, takes on direct reports, or assumes greater responsibility, review their pay against the new scope and expectations. The goal is to confirm that compensation reflects the level of the role and the employee’s proven capability.

Mergers and acquisitions

Post M&As, integrating new teams or organizations often exposes inconsistencies in how people are paid at each job level. A structured salary review aligns existing compensation frameworks, making it easier to address any glaring disparities and retain key talent during periods of uncertainty.

Departmental restructures

When teams are reorganized, for example, if you’re splitting one department into two or consolidating overlapping functions, salary reviews position the revised roles fairly within your internal pay ranges.

Pay equity and compliance

Legislation and transparency initiatives increasingly require employers to monitor pay equity. Look no further than the upcoming EU Pay Transparency Directive (effective June 2026) as an example of how companies will be forced to analyze and report pay gaps regularly. Conducting periodic salary reviews enables you to identify and address inequities before they become compliance risks.

Market shifts

If current market salaries show that compensation for specific roles has moved significantly, or if turnover signals that pay may no longer be competitive, a targeted review can recalibrate salaries to prevent loss of your best talent.

Relocation or remote transitions

When workers move between countries, these location changes can trigger a salary review. Many global companies use tiered location frameworks to keep pay equitable and in line with local market conditions.

Return from extended leave

Employees returning from parental, medical, or sabbatical leave may have been away during periods of rapid market change. It makes sense to review pay on their return to check their compensation reflects current benchmarks and aligns with peers who remained active.

Completion of probation or fixed-term milestones

For early-career hires, contractors, or project-based staff, salary reviews are often built into probation or contract milestones. These checkpoints confirm that the workers have met the required performance expectations.

Skills or certification attainment

In technical, regulatory, or specialized roles, new skills can materially shift an employee’s market value. Earning a recognized certification or mastering a high-demand tool can justify an interim salary review, particularly in organizations with tiered pay linked to skill depth or proficiency.

How different types of compensation changes fit into salary reviews

Most organizations manage multiple compensation processes throughout the year, some of which are highly structured. In contrast, others are more flexible and responsive. Understanding how these elements fit together helps you decide when to run a review and what level of governance or budget planning you need.

The table below shows how salary reviews compare with three other common processes.

Essentially, salary reviews are the connective tissue between the other processes. They’re more flexible than annual or merit cycles, yet more targeted than salary band refreshes. In many organizations, these events start as ad-hoc, manager-driven initiatives used to address pay gaps or retain key talent. As the company matures, formal cycles and governance frameworks emerge, but the ad-hoc reviews don’t necessarily disappear; instead, they coexist with annual cycles to keep compensation responsive year-round.

This trend highlights how far salary reviews have come as they’ve evolved from occasional exceptions into a core part of modern pay management, allowing organizations to stay agile between formal review cycles.

The key stages of a salary review process

A structured compensation review process keeps pay decisions fair, consistent, and aligned with your organization’s compensation philosophy, even when they’re triggered by one-off events. At Deel, for example, a team member’s compensation is automatically reviewed if they change fiscal residence and move into a new pay tier under our location-based pay framework.

While annual compensation cycles tend to be standardized and led by HR or Total Rewards teams, salary reviews can also be initiated by individual managers or, in some organizations, by employees themselves. To keep these ad hoc reviews defined and consistent, follow the five steps below, which place structure and governance at the center of your salary review process.

1. Preparation and data gathering

A salary review only works if it’s based on solid information. Most pay decisions go wrong at this stage, when managers rely on instinct or incomplete data. Gathering the right inputs early gives you a clear picture of where someone sits relative to peers, the market, and your own pay philosophy. It also keeps later discussions focused on facts instead of opinions.

How to do it

• Pull recent performance feedback and confirm that ratings are calibrated across the team.
• Check current salary data against internal pay ranges, compa-ratios, and range penetration.
• Review market benchmarks for comparable roles and locations, noting any major shifts.
• Look at pay-equity analytics to spot outliers or unexplained gaps.
• Document all data sources and assumptions so you can explain the rationale later if challenged.

2. Budget allocation and calibration

Once you have the data, the next question is: how much room is there to make the required changes? Salary reviews still draw on the same compensation budget that funds annual cycles and merit increases, so it’s essential to stay focused and fair.

How to do it

• Establish a total increase budget and allocate it across departments or job families so managers understand their guardrails.
• Run calibration sessions to compare recommendations across similar roles and levels, and to check that decisions align with pay philosophy and business priorities.
• Document rationales for proposed increases and note any exceptions for transparency later.
• In larger-scale reviews, like after a merger or departmental restructure, HR and leadership should lead these sessions to ensure consistency across the organization.
• For ad-hoc reviews, apply the same logic in miniature: confirm there’s budget headroom, validate internal equity, and double-check the adjustment won’t create new compression issues.

Example: A manager proposes a 7% salary increase to retain a key employee who is at risk of leaving. HR checks that the increase fits within the department’s available budget and that peers in comparable roles remain fairly positioned.

3. Decision-making and approvals

With clear data and boundaries in place, the decision itself should be straightforward, not a negotiation or a surprise. The goal here is to apply consistent reasoning and keep accountability visible. Who proposed the change, who validated it, and on what grounds? You’ll also create an audit trail that protects fairness and compliance later.

How to do it

• Start with the manager’s recommendation, backed by the data gathered earlier.
• Have HR or Total Rewards validate the proposal against salary benchmarks, pay ranges, and equity considerations.
• Route the decision to the appropriate approver, who is often a department head or senior leader, depending on the size of the increase.
• Keep a written record of the rationale, including performance indicators, market positioning, and business impact.

Example: A product manager receives an external offer. Their manager requests a salary review, citing performance and market data. HR confirms the employee’s pay sits below the midpoint for comparable roles and recommends an adjustment, which leadership signs off on within existing policy.

4. Communication with employees

Even when the outcome is positive, a vague or rushed conversation can leave employees confused or undervalued. When they don’t receive an increase, a clear and respectful explanation protects trust and keeps performance conversations productive. Consistency here is an important part of the employee experience.

How to do it

• Empower managers with compensation context: the data, the reasoning behind the decision, and how it fits within company pay principles.
• Encourage one-on-one conversations rather than email updates, especially for significant changes.
• Frame the discussion around contribution, growth, and market alignment rather than cost or “budget limits.”
• When it’s not possible to approve a raise, be transparent about why and outline what progress or changes would prompt a future review.
• Follow up with written confirmation to document the change, providing clarity for payroll and recordkeeping.

Example: An engineer’s salary remains unchanged after a salary review because they’re already paid near the top of their range. Their manager explains this openly, walks through how ranges work, and sets specific goals justifying movement to the next level.

5. Implementation and documentation

Implementation closes the loop and turns a one-off review into part of a consistent, traceable system. It’s also the stage at which informal decisions become official records—the data you’ll rely on for future audits, equity analyses, or budget planning.

How to do it

• Update payroll, HRIS, and comp planning tools promptly to reflect the new salary or effective date.
• Issue updated compensation letters or written confirmations so both employee and manager have the same record.
• Check for compliance with local tax, labor, and reporting requirements, especially in multi-country operations.
• Log the details of each decision: rationale, data sources, approval chain, and effective date.
• Periodically analyze these records to identify patterns, such as concentration of increases in specific teams or demographic groups.

Example: After a mid-year retention adjustment, HR updates the employee’s record in the payroll system, uploads the signed approval note, and flags the case in its quarterly pay-equity review to track consistency across similar roles.

Common pitfalls in salary review processes

Differences in data, market maturity, and expectations make salary review consistency hard to achieve on a global scale. Below are some of the most common challenges that organizations encounter.

Being swayed by favoritism

Bias in the workplace is well-documented. One survey found that 90% of employees have witnessed favoritism, and one in four say it happens regularly. When that same bias seeps into pay conversations, it undermines confidence in the process, especially when managers have uneven visibility into performance or market data. Salary reviews can quickly expose gaps, which is why calibration and shared criteria are even more important in distributed teams.

Failing to document your compensation strategy

Most organizations say they value fairness and transparency. Yet, Mercer’s latest Global Pay Transparency Report found that only 19% of U.S. companies have a defined pay transparency strategy. Without clear documentation, salary reviews risk becoming inconsistent from one manager or one country to the next. A documented framework gives employees and compensation leaders a shared understanding of what “fair pay” means in practice.

Relying too heavily on performance scores

Performance ratings can be helpful, but they don’t tell the whole picture. They reflect a moment in time, shaped by who’s doing the rating and what they value. When pay decisions lean too heavily into those scores, they exaggerate differences that may not actually exist. It’s more accurate to treat performance as one signal among others, including scope, market data, and internal balance, before making a call on compensation.

Ignoring global and local cost dynamics

Pay decisions become even more complicated when you compare roles across borders. A competitive salary in Berlin might be well above market in Bogotá or below it in Boston. Regular calibration across countries keeps compensation aligned to both local realities and the company’s broader pay philosophy.

Not complying with pay equity laws

Pay equity and transparency laws are tightening around the world, and the pace of change is only accelerating. Alongside the EU’s Pay Transparency Directive, similar rules are already in place or emerging in the UK, parts of the US, and Canada. For global employers, this means that salary reviews must withstand external scrutiny, with decisions being traceable and supported by data. The most effective safeguard is to build compliance into the process itself by standardizing documentation and running regular equity analyses across regions.

Forgetting about exchange rates and inflation adjustments

Even the best-designed pay structure can fall out of sync when currency values or inflation move faster than your review cycle. In some markets, a 10% swing in a single year can erase the impact of a raise or make pay suddenly uncompetitive. Regularly checking local economic data helps keep pay decisions grounded in current realities.

The future of salary reviews: Data, AI, and continuous compensation

Salary reviews include plenty of moving parts, which makes traditional pen and paper, or even basic spreadsheets, an almost impossible fit for managing them. To keep track of every aspect that goes into individual or organizational compensation, technology is the enabler you need to keep the process consistent, scalable, and fair.

Here’s how technology and shifting workforce expectations are reshaping the way salary reviews work.

Using AI to support smarter decisions

AI integrates seamlessly with most compensation workflows. It helps HR and rewards teams handle the scale and complexity of modern pay reviews by pulling market data, internal ranges, and performance outcomes into one view. The result is cleaner data and faster insight into where pay might be misaligned.

Example: You might use AI to spot when salaries in a region are slipping below market or when pay growth in one function is outpacing others. Machine learning handles pattern recognition, allowing compensation professionals to focus on interpretation, context, and next steps.

Moving from annual cycles to continuous reviews

Pay reviews are no longer tied neatly to a calendar. Roles evolve, people relocate, and markets shift too fast for an annual or even bi-annual process to keep up. In an Open Source CEO interview, Deel’s Global Head of Total Rewards, Jessica Pillow, says the goal is to stay ahead of those changes instead of reacting after the fact.

As an alternative, Deel Compensation keeps a constant pulse on local market data and cost of labor changes across 150+ countries, enabling you to catch shifts in the moment.

The result is a model that works continuously rather than in fixed cycles. Instead of waiting for a formal review period, you simply adjust pay in line with the latest evidence. It’s a more responsive way to manage compensation, one that keeps pay aligned with reality.

Understanding where skills live

As job structures flatten and roles evolve, titles are a decreasingly useful indicator of where to set compensation. What really matters is the mix of skills and experience a person brings, and how those capabilities align with business needs.

Jessica Pillow encourages organizations to start compensation planning by understanding where skills live and what they’re worth. For early-stage companies in particular, she believes the priority is to identify where specialized talent is concentrated and strike a balance between accessibility and cost. She points to German speakers as an example. Instead of merely looking at Germany to find this skillset, you might look further afield at workers in countries like Austria, Switzerland, Kosovo, and Belgium.

This mindset moves compensation away from static pay bands and toward a flexible strategy that values expertise and impact over hierarchy. It’s also how Deel structures its global hiring: roles are often posted as location-agnostic, but once the right person is hired, pay is localized to reflect the realities of their market and skill set.

Manage global compensation with Deel

Running salary reviews across countries, currencies, and compliance frameworks takes more than good intentions; it takes structure. Deel Compensation brings data, policy, and process into one place, so HR and finance teams can make pay decisions quickly and confidently.

With Deel Compensation, you’ll:

• Connect pay decisions to performance and company policy
• Calibrate reviews with built-in checks for equity and consistency
• Give managers the tools and context for fair, confident conversations
• Gain access to benchmarking and salary data across roles and regions
• Stay ahead of evolving pay transparency requirements worldwide

Ready to run equitable and transparent reviews globally? Request a free Deel demo today.