Pay compression and inversion are significant problems for many organizations and are often severe in schools of business in particular. At the same time, there is more insistence on showing accountability and paying employees based on performance. The authors explain and show a detailed example of how to use a Compensation Equity/ Performance Matrix (CEPM) approach to rationally and fairly address both of these issues simultaneously. The context is discussed along with the use and limitations of this approach. The CEPM approach can be used by any type of organization facing these problems.