Companies must ask themselves where they stand with pay equity as they currently operate, as well as over time. It’s critical to ensure they are equally compensating employees in comparable positions — regardless of any facet of identity that has historically contributed to pay gaps.
There are many reasons organizations should and must evaluate where they stand on pay equity. First of all, it’s crucial to stay on top of evolving federal and state laws protecting employees against unequal pay and discriminatory practices so as to avoid litigation — not to mention employee dissatisfaction. Being proactive in the approach to achieving pay equity can also help companies foster an employee-centered company culture.
Let’s not forget the possible benefits to the organization for eliminating pay gaps, too. As Inc.cites, besides a reputational boost, companies have seen an increase in worker productivity and reduced turnover as a result of these efforts.
Here are some areas to consider when evaluating your company in terms of pay equity.
Auditing Current Pay Equity & Fixing Discrepancies
It’s difficult, if not impossible, to fix what isn’t a known quantity. Thus, an in-depth, data-driven audit of current compensation practices is the first step toward pay equity.
This process effectively brings to light what everyone within the company is getting paid for which responsibilities and can therefore reveal oversights and outdated practices — allowing your company to correct discrepancies as needed and update best practices so as to minimize inadvertently creating the same sources of inequity in the future.
Following an audit, companies often find as many as five percent of employees are eligible for a pay increase as part of the remediation process.
Implementing Fair Pay Decisions in Hiring & Promotions
Pay decisions are made upon hiring new candidates and upon promoting or rewarding existing employees, which means equity needs to happen on multiple levels.
As one expert asks for the Society of Human Resource Management: Is your company currently handling decisions related to starting pay, merit increases, promotions, one-off increases and incentives objectively and consistently? An example here would be offering a controlled salary range for a given position rather than basing each candidate’s offer on their past compensation — the latter of which many states are outlawing in an attempt to close wage gaps.
One thing to note here is training for leadership specifically pertaining to pay equity can help get everyone on the same page in terms of the importance of pay equity and how their actions can help or hinder it. Anyone who will have a hand in hiring, negotiating, reviewing performance or promoting employees can benefit from training of this nature. Taking these decisions out of the subjective hands of individual leaders and calculating them objectively goes a long way toward eliminating biases and discrepancies, too.
Incorporating Pay Transparency into Company Culture
What does pay transparency look like in action? Well, first of all, employees should never fear retribution for discussing their salaries or bringing forward concerns to managers or HR. Companies can even go one step farther, voluntarily making available salary ranges by position as well as objective criteria for achieving raises, promotions and bonuses.
What can transparency bring to company culture? Trust. A majority of employees (60 percent) say they want more salary visibility in the workplace. Rather than treating compensation like an opaque or even forbidden subject, why not use transparency to strengthen company culture and help employees gain a better understanding of what they can expect from your organization?
Based on these three areas, you can start to see where your company currently resides with pay equity. Then you can set realistic goals to help your organization get where it wants to be in terms of pay equity, culture and communication.