Market data have been the default anchor for compensation design in the United States for as long as most compensation professionals can remember. Historically, when organizations needed some frame of reference to determine how to pay someone, the work steps were straightforward: Market price the role, slot it into a pay range if necessary and manage from there. In a market with comparatively robust survey resources and a long-standing emphasis on external competitiveness, this approach worked for a long time.
The exclusive focus on market data is waning, however, and the U.S. is behind the curve. Organizations today are operating in an environment shaped by pay transparency, broader equal pay expectations and greater scrutiny from employees, candidates, regulators and boards. Pay transparency regulations exist globally, with the EU Pay Transparency Directive and pay transparency requirements in more than a dozen U.S. states and three Canadian provinces, with more in the pipeline. Employers need to explain how pay decisions are made, how internal equity is managed and why their overall system is credible and consistent.
The center of gravity is shifting from market pricing to pay explainability.
Why the old model is under pressure
Traditionally, many U.S. employers treated market data as the most objective and defensible compensation input available. Internal equity often functioned as a secondary check or to manage jobs without benchmark matches rather than a true design principle. That model worked reasonably well in a lower-transparency environment. While it was once considered impolite to discuss compensation, this is no longer the case.
As transparency requirements expand and employee expectations evolve, organizations are finding that external benchmarks are not the answer to every question. Market data can indicate what similar roles may command externally, but they cannot determine whether the internal level is comparable, similar roles are being treated consistently across business units, or manager discretion is creating outcomes that are difficult to defend. In short, market data remain necessary, but they are no longer sufficient.
What leading organizations are doing differently
The organizations that are adapting most effectively are repositioning market data. Rather than treating market data as the whole answer, they are using it as one input within a broader compensation framework grounded in strategy, structure, governance and communication. Four priorities stand out.
Implications for leadership compensation
This shift is not limited to broad-based employee populations. Historically, senior roles have been more bespoke and more directly tied to market pricing, often outside formal structures. However, as organizations develop and strengthen their job frameworks, the expectation that rewards decisions (salaries, incentives, titles) should also fit within the same coherent system is starting to move upward as employees seek to understand how to progress into these levels.
The bottom line
Market data are not going away and data are getting more robust all the time. But gone are the days that data monopolize pay decisions. Organizations in the U.S. will continue to leverage the breadth and depth of market data while learning from the EU and Canada to develop pay systems they can defend.
Compliance exercises will be just that — an exercise — because they will have a compensation system they can explain with clear job architecture, strong governance, disciplined pay administration and thoughtful communication. In addition to ensuring market competitiveness, these tools establish a strong employee value proposition which, evidence shows, increases attraction, retention and engagement.
A version of this article was originally published in WorldatWork’s Workspan Daily on May 28, 2026.
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