Industry Research: The Path to Pay Equity

These times of historic economic and societal upheaval have created a resounding call for organizations to address the issue of diversity, equity and inclusion (DE&I) head on. There’s really no longer room for the middle ground and pay equity’s role in the overall equation is critical. The fact is, most organizations we talk to at Salary.com, from small businesses to global enterprise brands, want to do right by their employees, particularly when it comes to getting pay right. Yes, there are more states enacting pay equity laws and that trend will continue, but moreover, it’s the right thing to do. 
 

Getting pay right has long been a top goal of high-performing organizations seeking to attract top talent, create engaged workforces, and reduce turnover. And while almost three-quarters of organizations in a recent Salary.com survey said they pay their employees fairly, more than half do not have a formal process in place to address pay equity. 

Of course, you need more than good intentions to create pay equity within an organization. That effort requires a formal pay equity process to create the structure, data, measurement and compliance needed to ensure success. 

The reality is, for many companies the business of getting down to business on pay equity can seem daunting. Fortunately, there are resources that help companies align compensation practices with recruiting, performance, and development initiatives, leveraging data and meaningful insights to inform the process. 

Following are three key steps to take as you get started on the path of creating a corporate culture steeped in sustainable, equitable pay. 

Establish a Pay Philosophy 

A pay philosophy, established by an organization’s leadership and HR team working in tandem, puts a stake in the ground on where the company stands when it comes to fair pay. The resulting framework should address many factors, including an organization’s industry, size, and business objectives. A well-designed pay philosophy should also reflect the overall business’s competitive outlook and compensation and total rewards strategy. To do so, it is important to have reliable market salary information, an understanding of your job architecture and the internal drivers that will support pay decisions. A pay philosophy is a living document that is revised, as needed, based on changing market factors. 

Understand the Data 

The review of complete and accurate data is critical to the success of any pay equity program. To create an informed pay equity strategy, an organization must look at the following factors: 

•  Demographic data 
•  Time in role 
•  Performance history 
•  Salary increases 

With the right data and tools, whether they be an excel spreadsheet or other statistical analysis tools, organizations can review data across roles, departments, levels, etc. and determine correlations between the pay of similar jobs and employee groups. 

In addition to the ongoing review of this data, there should be a living library of accurate job descriptions that includes review and approval history, governed templates to drive consistent language across roles, and accurately captures the necessary duties, skills, experience levels, and education needed to accomplish the job requirements. 

Foster Communication and Transparency 

Communication, a critical element of pay program success, continues to be an area where organizations are lacking. To integrate a greater understanding of a compensation philosophy, employers must increase their level of transparency and let go of some of the discretion involved in making pay decisions. 

Any manager at any company must be able to honestly and accurately answer the question from an employee, ‘How is my pay determined?’. As managers are often the ones speaking directly to employees, they must not only understand the pay philosophy, they must also be trained on how to confidently and accurately communicate it to their teams. 

Transparency requires the review and improvement of pay policies and practices so they will be perceived by employees as fair: both externally competitive and internally equitable. One of the top drivers of employee engagement is a healthy relationship between managers and employees. To increase employee engagement, managers must foster interactive relationships that include ongoing discussions about performance. Once-a-year performance sit-downs no longer cut it when it comes to creating a dynamic and engaged workforce. 

Get Started Now 

Leveraging Salary.com’s data and industry leading compensation platform gives organizations the insights needed to make data-driven pay decisions guided by the most experienced team in the compensation industry. We’re dedicated to helping organizations get pay right. In addition to providing the tools, we have a pay equity consulting team that works with organizations to uncomplicate what can seem like a complicated process. 

When starting down this path, organizations quickly see that the benefits of instituting pay equity policies extend far beyond mere compliance to legislation initiatives. A fair and equitable culture elevates an organization’s reputation and employee engagement, setting it up for long-term success. 

Author Bio

Katie Stukowski is Managing Director at Salary.com. Visit www.salary.com Connect Katie Stukowski Follow @Salary