In every organization, employees are constantly making comparisons.
Sometimes those comparisons are explicit: a conversation between colleagues about salaries, job titles, or promotion opportunities. More often they are internal and unspoken. Employees quietly evaluate their role, their contribution, and their compensation against others in the organization.
This process is not accidental or irrational. It reflects a fundamental principle of human motivation known as Equity Theory, first developed by psychologist John Stacey Adams. The theory proposes that employees assess fairness by comparing what they contribute - effort, education, experience, responsibility, and performance - with what they receive in return: pay, benefits, recognition, and opportunities. They then compare this “input-outcome ratio” to that of others.
When employees perceive fairness, motivation and engagement follow. When they perceive inequity, tension emerges, and employees attempt to resolve it.
This dynamic is not theoretical for HR professionals. It is a daily reality. And in public-sector organizations, where structures and pay relationships are particularly visible, maintaining internal equity is one of HR’s most important responsibilities.
Two experiences from my career illustrate just how powerful internal equity can be, and what happens when it is either carefully protected or inadvertently disrupted.
When a Job Evaluation Restores Fairness: A Real-World Example
Early in my career, while serving as Manager of Compensation and Benefits for a mid-sized public sector organization, a manager from the Building department walked into my office visibly frustrated. He believed his job was under-valued and requested a formal job evaluation.
This was not an unusual request. Compensation professionals hear these concerns regularly, and in this case I understood why he felt the way he did.
A few years earlier, the department’s director had retired. Rather than replacing the role, the organization restructured the department and redistributed the director’s responsibilities across several existing positions, including this manager’s. He had legitimately taken on additional responsibilities, yet his compensation had not changed.
We went through the formal job evaluation process, and the results confirmed that the position should move up one level in the organization’s structure.
When I shared the results, I expected the manager to be pleased.
“How many levels did it go up?” he asked.
“One level,” I replied.
His response was immediate disappointment.
“I thought it would go up three levels,” he said. “I think my job is comparable to the Fire Chief’s, and that role is three levels above mine.”
His reaction illustrates something every compensation professional eventually learns: everyone in an organization has a comparator. Employees instinctively identify others whose roles they believe are similar in value to their own.
The challenge for HR is that those comparisons are not always accurate.
I asked him why he believed his role was comparable to the Fire Chief’s. He explained that both roles had similar numbers of direct reports, similar education requirements, and both were responsible for aspects of public safety.
After listening carefully, I walked him through the differences.
While the Fire Chief had a similar number of direct reports, the role also carried responsibility for roughly 150 indirect reports — a significantly higher number than this manager was responsible for. The Fire Chief was a member of the Executive Leadership Team, helping shape organizational strategy. The role regularly represented the municipality with the media and the public. The scale and scope of responsibility were fundamentally different.
I then redirected the comparison to a more appropriate referent: a peer manager in the Capital Assets department whose responsibilities and scope were far more aligned with his own.
Gradually, his perception shifted. By the end of the conversation, he accepted the outcome and left satisfied with the evaluation.
Nothing had changed about the job evaluation result. What changed was his understanding of the appropriate comparison point. Once that comparison was corrected, perceived equity was restored — and the tension disappeared.
When Internal Equity Breaks Down: The Consequences of Cutting Corners
A few years later, I encountered a very different situation.
Our organization was implementing a major enterprise resource planning (ERP) system. The implementation required hiring or seconding employees into specialized project roles, some of which were expected to become permanent once the system was operational.
Because of that expectation, we followed our standard process of defining and evaluating the roles within the organization’s job evaluation structure.
One role — a technical subject matter expert responsible for the new system — was evaluated at Level 11, consistent with other advanced technical specialist roles across the organization.
However, when the results were presented, the project leadership team and divisional leadership argued that the role should be evaluated at Level 12 to attract qualified candidates.
My recommendation was straightforward.
First, pause and test the assumption by gathering market data from other municipalities and comparable employers. Second, if the market truly required higher pay, address the issue through a market premium, rather than altering the organization’s internal equity structure.
But the ERP project was under intense pressure to move forward quickly. My recommendation was overruled. The position description was adjusted in ways that artificially increased its evaluation score, and the role was slotted at Level 12.
At the time, the decision appeared expedient. Years later, the consequences became clear.
Once the ERP implementation was complete, project staff transitioned into operational departments, primarily IT and Finance. When one of the Level-12 positions became vacant and was posted, employees began to notice something troubling.
The role was being paid at the same level as several supervisory positions within those departments — even though it carried no staff management or budget responsibility.
The inequity was obvious. Complaints began. Morale declined. Productivity suffered.
After reviewing the situation, the IT department agreed to correct the problem. The role within IT was re-evaluated and reduced by one level.
But the mirror position within Finance remained at the higher level because that department’s leadership resisted the change.
The result was a new problem: employees in IT began applying to the Finance position because it offered the same pay for significantly fewer responsibilities. Others demanded re-evaluation of their own roles.
The organization spent significant time and resources responding to the fallout. Relationships deteriorated, HR’s credibility suffered, and the issue lingered for years.
All of it stemmed from a single decision to compromise internal equity in the interest of speed and a perception — or more accurately a blind assumption — that the organization wasn’t paying competitively.
The Hidden Power of Internal Equity
These two situations highlight a critical reality: internal equity is one of the most powerful forces shaping employee perceptions of fairness, culture, and productivity.
Employees may not understand the intricacies of job evaluation systems, compensation structures, or market benchmarking. But they are highly attuned to whether the organization values roles consistently.
When internal equity is maintained, employees feel the system is fair. When it is disrupted, employees begin trying to restore balance — exactly as Equity Theory predicts.
They may reduce effort, challenge decisions, seek re-evaluations, or leave the organization altogether.
For HR professionals, this makes safeguarding internal equity a core organizational responsibility.
Who Owns Internal Equity?
Ultimately, the responsibility for maintaining internal equity sits with HR.
But HR cannot protect internal equity alone.
When operational leaders push for exceptions — often with the best of intentions — HR must have the authority and support to uphold the integrity of the compensation framework. That support must come from executive level leadership.
Without that backing, the pressure to make short-term adjustments can gradually erode the entire compensation structure.
A Better Way to Handle Market Pressures
Situations will inevitably arise where leaders believe a role cannot be filled at the current pay level. When that happens, organizations should follow a disciplined approach:
1. Validate the Market Assumption
Before making structural changes, HR must have the time and authority to determine whether the perceived market gap actually exists.
This includes:
- Reviewing qualifications to ensure they have not been unintentionally or deliberately inflated
- Comparing the role with similar positions in peer organizations
- Conducting a targeted market analysis
At this point, an understandable tension sometimes emerges between HR and operational leaders.
Operational leaders often argue — sometimes quite passionately — that they understand their roles better than HR and should therefore have the final say over the qualifications and responsibilities of positions within their departments. There is some truth to this argument. Department leaders do possess deep operational knowledge of the work being performed and the skills required to perform it effectively.
However, operational leaders are also naturally focused on the success of their own departments. Their objective is to recruit and retain the strongest possible talent within their team, and from that perspective it can be tempting to increase qualifications or expand responsibilities in ways that elevate the evaluated level of a role.
HR’s role is different.
HR is responsible for protecting the integrity of the entire compensation system, not just a single department. While any one position may appear unique within a department, across a large organization there are almost always comparable roles with similar levels of responsibility, technical expertise, and impact.
HR professionals have the tools, methodology, and cross-organizational perspective required to conduct a consistent and objective evaluation. They can compare roles across departments, benchmark against external organizations, and ensure that qualification requirements reflect genuine organizational need rather than departmental preference.
For that reason, HR must be trusted — and supported by the organization’s most senior leadership — to conduct these reviews and present evidence-based recommendations.
When HR determines that a role is appropriately evaluated within the internal structure, that recommendation should carry weight. When HR determines that market pressures exist, those conclusions should be supported with clear data.
In either case, maintaining the integrity of the system requires that HR’s role as steward of internal equity be recognized and reinforced by senior leadership.
2. Address Market Pressures Without Distorting Internal Equity
If a genuine market gap exists, the solution should not involve altering the job evaluation structure.
Instead, organizations should use tools designed for that purpose — such as market premiums or recruitment allowances — that address external supply and demand while preserving internal job relationships.
Employees will most certainly struggle to understand why a very comparable peer role is suddenly valued more highly than their own, and the ensuing behaviour to resolve this tension is very often detrimental to the organization. But they can understand the reality of market scarcity and the need to hire into vacant positions at a rate the market demands.
When the distinction between internal value and external market pressure is transparent, employees are far more likely to accept it.
Protecting the Integrity of the System
Internal equity is not just a technical exercise in compensation design. It is a foundation of organizational trust.
When HR maintains clear job evaluation structures and leaders support those structures — even when it is inconvenient — the organization protects its credibility, culture, and productivity.
Conversely, when those structures are compromised for short-term convenience, or when leaders push for exceptions in an effort to attract the best and brightest talent for their own teams, the broader system can begin to erode. What may appear to be a reasonable departmental decision in isolation can unintentionally create inequities that ripple across the organization.
Over time, these decisions accumulate. Employees begin to question the fairness of the system, comparisons intensify, and HR finds itself responding to a growing number of evaluation challenges, reclassification requests, and morale concerns.
In public-sector organizations especially, where transparency and fairness are central values, protecting internal equity is not simply an HR responsibility.
It is a leadership responsibility.
