Relative Pay Band Development as a Governance Instrument for Analyzing Compensation Equity Dynamics – A Privacy-Preserving Indicator for Structural Monitoring Over Time

Against the backdrop of increasing demands for transparency, data protection, and employee participation, organizations face growing challenges in monitoring and communicating compensation structures without disclosing sensitive pay information.While research on pay equity extensively differentiates between procedural and distributive justice, practical instruments for observing structural developments over time remain limited.This paper introduces the Relative Pay Band Development (RPBD) as a governance-oriented indicator for analyzing changes in internal compensation structures within defined comparison groups.Rather than assessing absolute pay levels or individual compensation, the RPBD focuses on the relative dispersion of pay and its development over time.As the indicator relies exclusively on aggregated measuresminimum, maximum, and median payit enables structural analysis without revealing individual or confidential information.The paper conceptually anchors the RPBD in theories of organizational justice and discusses its methodological properties with regard to data protection, scalability, social acceptance, and communicability.An illustrative example demonstrates the logic of the indicator and its interpretation.The RPBD does not provide a normative assessment of pay equity but serves as a monitoring and early-warning instrument for governance processes.The paper concludes with a discussion of limitations and outlines implications for human resource management and co-determination.