The regulations around pay equity and diversity, equity, and inclusion in the workplace (DEI) in 2022 are undergoing a fundamental shift. Two forces — Washington and Wall Street — are aligned in the drive for increased rules, regulations, and commitment to transparency. They’re responding to increased pressure from employees, activists, and institutional investors who are fed up with a broken status quo. This year, Rhode Island and Nevada passed pay equity laws, joining 7 other states.
The Biden administration is embarking on an ambitious agenda with a comprehensive approach to advancing gender and racial equity for all federal employees. The administration is also considering new rules to enhance disclosure around board diversity and human capital management.
Diversity, equity, and inclusion in the boardroom
A number of regulatory actions are in the proposed rule stage at the SEC, indicating possible implementation in the coming months. The commission is actively considering recommendations to enhance disclosures regarding the diversity of board member nominees while requiring robust disclosures of human capital management.
An inclusive workplaces start from the top. It’s important that board members’ demographics reflect those of current and prospective employees. It’s much easier to encourage an inclusive culture when organizational leaders are personally committed to workplace diversity.
On Wall Street, the Institutional Shareholder Services (ISS), which provides data analytics to companies and investors around the world, proposed benchmark policy changes for 2022. Current ISS policy requires voting against companies in the Russell 3000 and S&P 1500 where there are no women or ethnically or racially diverse members on the company’s board. Proposed changes will expand this policy to apply to companies outside of these domains.
While companies are stepping up to meet the demands around board diversity, they are still falling dangerously short where human capital metrics are concerned. Only 16% of 300 companies surveyed from the S&P 500 addressed pay equity practices, leading independent analysts to call for strengthening disclosures around human capital management, a warning for companies that fail to take action now. A commitment to diversity includes evaluating talent pipelines and talent pools fairly, especially when the need to level the playing field is so great.
Pay equity audits
In October, 22 Senators — almost one-quarter of the U.S. Senate — sent a letter to SEC Chairman Gary Gensler demanding greater diversity and inclusion metrics within the $70 trillion asset management industry. Additionally, the House Financial Services Committee released draft legislation for the Ensuring Pay Equity Act, which would require financial agencies covered under Dodd-Frank to conduct internal pay equity audits.
An emboldened EEOC continues to champion the cause. Former EEOC Commissioner Victoria Lipnic stated that the commission’s Strategic Plan for 2022 will implement new priorities around “collecting pay data, enforcing pay equity, and disability rights,” indicating that pay equity and disclosure will become prominent themes for the EEOC in 2022.
The future workplace
The outlook for pay equity and diversity, equity, and inclusion in the workplace in 2022 is shaping up to be robust, particularly when combined with employee and investor insistence to get to this right now.
This changing regulatory landscape is not an issue for forward-thinking companies that rely on workplace equity software-as-a-service (SaaS) like Syndio’s. Our platform runs continuously to provide complete, real-time data regarding pay equity and opportunity status, capturing evolving dynamics on a daily basis and ensuring that the best employees are paid and promoted without bias. These solutions remove the confusion and vulnerability associated with one-time or annual audits. And they allow companies to comply with information requests with immediacy, ease and confidence.
Syndio sees a future where transparency around equity drives positive outcomes for all involved — government regulators, CEOs, corporate boards, shareholders and indeed, employees. And if the outlook for 2022 says one thing with certainty, it is that the time to take action is now.