What is pay parity?
Pay parity is the practice of paying people equitably. This means that those in the same job and location receive fair pay relative to each other regardless of their race, gender, sexuality, or any other identity. Specifically, the term refers to an effort to erase the gender pay gap between men and women in which women make, on average, less than men.
Why is pay parity important?
Pay parity is important to strive for as an ethical principle and has a significant impact on business outcomes.
By offering fair pay, your organization will be able to:
- Build a positive employer brand
- Attract the best talent
- Reduce absenteeism and employee turnover
- Improve productivity
- Demonstrate social responsibility
- Reduce the risk of expensive legal action
Pay parity vs. pay equity
As two terms related to pay inequality in the workplace, it’s easy to get confused by the difference between the definitions of “pay parity” and “pay equity.” While similar, these are two distinct terms.
Pay equity refers to paying people fairly and consistently without discrimination based on protected categories while considering factors such as education, experience, and tenure.
Pay parity requires employers to show there is no pay gap across the workforce between men and women or other minorities.
The essential difference here is whether or not companies take professionals’ credentials and comparable work into account.
Who is most impacted by inequity in pay parity?
The wage gap affects people with intersectional identities, or members of more than one minority group, the most. Non-white women, including Black women, Native women, and Hispanic women, make an even smaller percentage of the average white man’s wages than their white counterparts.
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How do you achieve pay parity?
While it’s easy to demonstrate that the pay gap exists, it’s much harder to actively make salary parity a top company priority and create change within a long-established system. Yet there are steps that employers can take to work toward wage parity in the workplace, including:
- Perform a pay audit across roles, demographics, and locations to determine whether or not there is a pay gap and, if there is, what factors come into play. Possible factors range from education and work experience to unconscious bias and more overt discrimination.
- Identify and assess inequities in talent management across the entire employee lifecycle, including recruiting, hiring, performance review, and promotion practices.
- Create policies to ensure equitable hiring practices, management, compensation, and more.
- Provide equality training to managers, supervisors, HR, and anyone involved in performance compensation.
Ultimately, discrimination is deeply embedded in the working world, requiring HR leaders to look closely at their policies and systems to uncover pay issues and their root causes. To create meaningful change, you must be ready to take a hard look at your organization and take real action against inequality.
Why should pay parity be part of modern HR strategy?
The statistics about the pay gap can be discouraging, but the reality of systemic discrimination in the workplace should be cause for action, not surrender. HR leaders are uniquely positioned to make a real difference by striving for parity in their organizations, demonstrating corporate responsibility while improving key business outcomes.