Modern companies have made huge strides to improve the employee experience and establish core values of transparency and fairness. Still, as demonstrated by this 2020 survey by Payscale, many employees don’t feel they’re getting the best deal.
When employees feel they’re paid fairly, they are more satisfied and invested in their work and more loyal to their employer. When employees feel the opposite, it results in low performance and higher turnover.
Here are three ways HR can address pay inequality in the workplace right now.
1. Pay transparency is a powerful tool to fight pay inequality
In the past few years, cultural demands and legislation have made pay transparency a pivotal solution to fixing pay inequality.
There are different levels of transparency, but essentially it follows that the more information that’s out there—the salaries of your peers and co-workers, or the algorithms used by a company to determine salaries—the easier it is for employees to advocate for themselves. Also, any unjustified salary discrepancies due to bias related to race or gender will come to light.
There’s been an incredible amount of media coverage on pay transparency, from the Google employee who created a spreadsheet for co-workers to share their salaries to Twitter campaigns using the hashtag #TalkPay, encouraging people to share their current and former salaries openly.
And companies that have implemented pay transparency are seeing positive results.
Buffer, a social media management company that was an early adopter of this transparency model, saw their job applications more than double after publishing every employee’s salary online. CEO Joel Gascoigne said the reason was that transparency is one of the most powerful values for company culture, adding, “Transparency breeds trust and trust is the foundation of great teamwork.”
This approach is moving beyond corporate responsibility and is slowly becoming the law of the land. California recently passed legislation requiring employers to file equal pay reports annually, starting in March 2021. Colorado and a dozen other states have either passed or are considering a variety of pay transparency bills.
2. Conduct a pay equity audit (PEA) to find outliers and make things right
A pay equity audit involves comparing the salaries of employees doing similar work. Any pay differential that can’t be explained by disparities such as work experience or job performance should be looked into. Similar to a pay gap analysis, this audit allows HR to compare salaries and find any glaring mistakes. This type of audit falls to HR professionals to lead, and with an HRIS (like Bob), the information will be easy to sort through. You should access the employee’s time at the company, job role, promotion history, performance reviews, and demographic information.
This analysis can help HR professionals understand implicit and explicit differences in how organizational culture and policies apply to different gender groups.
Adobe conducted its own PEA and after a two-year effort announced that it achieved pay equity in October 2018. A few months later, Intel announced the same, achieving gender pay equity for its global workforce of 100,000+ employees.
“Our commitment to achieving gender pay equity is central to making Intel a truly inclusive workplace, which we believe is a key factor in employee performance, productivity, and engagement,” Julie Ann Overcash, VP of HR and director of compensation and benefits at Intel, wrote in a celebratory post.
3. Keep track of HR metrics related to pay equality
There are a few metrics HR pros should keep their eye on to get a sense of fairness and equity in the company and ensure all employees are getting the same opportunities to advance, regardless of age, race, or gender.
Salary range penetration
Every job description in an organization should come with an estimated salary range. While there may be occasional deviations from this range for exceptional candidates, the range should reflect this position’s standard pay. Examining differences in salary range penetration can help reveal pay gap issues. Conduct regular compensation audits to compare compensation for employees in similar roles with similar amounts of experience.
Salary average and salary change
Two similar metrics used to spot pay gaps are salary average and salary change. Salary average compares the average salaries of two groups of people, and salary change compares how salaries have changed between a given period. By breaking down these metrics by demographic (age, race, gender, ethnicity, sexual orientation, etc.), you’ll be able to identify any existing parities in your organization that go beyond roles and their differences.
Career path ratio
Employees should feel empowered to move in all directions. Using the career path ratio, HR can keep track of both promotions and lateral moves to see how employees are growing, changing, and adapting within the organization. Pay inequality doesn’t just aim to address the starting salary of an employee. If all employees, regardless of gender or race, aren’t given a fair shot at a raise and promotions, then pay inequality will continue to widen. To fully address the fair pay issue, HR needs to track who gets promoted and why.
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It’s up to HR to shift the conversation
No single compensation leader or HR professional can solve pay inequality, which is a global issue. HR does have the power to shift the conversation and make equal pay for equal work a priority. Imagine the boost to company morale when everyone knows they are being paid fairly regardless of age or gender or how brazen they are during salary negotiations.