With rising inflation worldwide, economic signals of a global recession risk, international geo-political turbulence, and a world still adapting to the aftermath of pandemic disruptions, the global macroenvironment remains volatile. Amidst this backdrop of uncertainty, attracting and retaining talent remains a top long-term growth strategy for most executives globally. To compete, companies must find ways to differentiate themselves in the job market, reduce turnover, and keep top talent engaged. This means that making progress around workplace equity matters more than ever.
Syndio conducted its annual survey to identify current trends, priorities, and sentiment around workplace equity initiatives. We surveyed over 400 professionals and leaders primarily in HR, Total Rewards, and DE&I, working for companies primarily in the U.S. and/or Europe.
Below we break out some of our 2023 findings specific to companies headquartered in Europe or with a “significant presence” in Europe to spotlight how companies with a European presence are approaching workplace equity initiatives, focusing their resources, and communicating progress. Generally, these European trends align with the results in the global report, though the specific percentages differ.
The state of workplace equity in Europe
The ongoing conflict in Ukraine caused energy cost increases, inflation, and the risk of recession. The pressure on company margins will potentially lead to employment contraction in some EU markets with the possibility of increased labour unrest due to the cost of living crisis. However, millions left the workforce during and post-COVID, workforce and talent pools have shrunk significantly, and staff shortages are pervasive. The war for talent not only continues, but may even have become more competitive. Attracting and retaining talent will require companies to address pay inequalities and improve their employee brand if they want to compete in a shrinking talent pool.
The EU parliament has passed a directive to negotiate with member countries on pay transparency legislation, though the timeline to establish it as a legal mandate in Europe is not yet defined. ESG is also undergoing a complete transformation as the tick-the-box lip service and greenwashing approach of previous years is being regulated out and replaced by verifiable and transparent reporting. For example, the financial regulator of the UK — the Financial Conduct Authority (FCA) — just proposed much more stringent sustainability disclosure rules, while across the EU, sustainability reporting standards are being redefined by the European Financial Reporting Advisory Group (EFRAG) with the Corporate Sustainability Reporting Directive (CSRD) which could be enacted by as early as the end of 2022. Sustainability metrics, including human capital metrics, are becoming a necessity for organisations as all stakeholders across investors, customers, employees, and regulators demand them.
All of these market pressures are combining into what amounts to a mandate for companies to prove through data that they are making progress towards reducing pay gaps, building diverse teams, and treating employees equitably throughout the employee experience. This has led to the emergence of workplace equity — a concept that encompasses all elements of compensating workers equitably and ensuring that all candidates and employees are given equal access to opportunities. How are companies with a presence in Europe addressing workplace equity, and how can you use these lessons to prepare for 2023?
Despite uncertain economic forecasts, workplace equity remains a priority. 54% of respondents say their workplace equity programmes have become a higher priority since January 2020, and 81% say their programmes will maintain or increase in priority in 2023.
To keep workplace equity a priority, organisations need buy-in from the top down. 50% of companies believe their leadership is truly bought-in to their workplace equity initiatives, which leaves a lot of companies without the executive support they need.
About three out of four companies see room for improvement in how they measure their workplace equity programmes. Making real progress on workplace equity initiatives requires setting realistic goals, conducting frequent analyses, investigating and correcting issues, and communicating openly about actions and outcomes — all of which depend on having a strong grasp of people-related data and workplace equity analytics.
Enterprise: Companies with 15,000 or more employees
Mature programme: We asked respondents* which of the following options best describes the maturity of their workplace equity analyses. We consider companies that answered "Maintaining" to have a mature workplace equity programme.
Starting out - 10%: Just starting (or restarting) workplace equity analyses), but do not have an established cadence
Building up - 26%: Run limited, occasional, or ad hoc analyses, but have not established a regular cadence, or would like to conduct more
Integrating - 50%: Run analyses on a regular cadence and working to close the loop and incorporate results into workplace equity activities and employment processes
Maintaining - 14%: Conduct regular analyses and have a mature system for incorporating results into workplace equity activities
*These percentages are specific to survey respondents for companies headquartered in Europe or with a "significant presence" in Europe
Trend 1: The definition of diversity is expanding.
Globally, pay equity has historically focused on comparing pay by gender, ensuring that women and men are paid equally for performing the same work. However, diversity encompasses a full spectrum of aspects beyond gender that can influence how equitably employees are treated, such as race, age, refugee status, and veteran status.
Companies are starting to collect and analyse data on these other categories to ensure equitable treatment. As an example, the emergence of voluntary disclosure of ethnicity pay gaps by many organisations is a crucial step in assessing if and where racially-based inequalities exist in their workforce.
Caregiving responsibility (9%) and refugee status (15%) are emerging as identity groups that companies are starting to track.
Mature programmes are much more likely to track disability status (56% vs. 37% overall) and veteran status (63% vs. 37% overall).
Trend 2: Pay equity standards are rising.
Completing an annual audit and remediating the pay equity issues you uncover doesn’t necessarily mean that the root causes of those issues have actually been addressed — so you could continue to see pay disparities pop up year after year. That’s why one of the most fundamental shifts Syndio is seeing is a move to more frequent pay equity analyses, whether that’s every six months, quarterly, or even more frequently. The speed and efficiencies afforded by purpose-built technology are enabling employers to embed periodic analyses throughout the year to ensure they are proactively monitoring the outcomes of day-to-day compensation decisions.
Multinational companies face an expanding range of pay reporting and pay scale transparency legislation in different jurisdictions across the globe. Many UK- and EU-headquartered organisations are grappling with considerable uncertainty on the EU Directive on Pay Transparency. Despite the EU parliament passing a directive to negotiate with member countries on pay transparency legislation, it is not yet clear when it will become a legal mandate in Europe.
The good news? Moments of uncertainty are also windows of opportunity — an opening to break down old frameworks and rethink long-established approaches. It makes sense for multinational organisations to want to have a consistent global model for compensation transparency, and the trend towards formalising compensation disclosure could have downstream impacts even on non-multinational organisations. Beyond just ensuring global consistency, compensation transparency will more importantly help companies retain talent and build a strong culture and brand.
Syndio’s survey found that leading multinational companies employ a consistent approach to global analyses. Multinational companies not conducting global analyses are falling behind the curve and potentially damaging their employee brand.
The overwhelming majority of companies are analysing pay equity at this point, but they are now doing it more often and including more types of compensation.
- 91% of companies have conducted a pay equity analysis at some point
- 53% of organisations now conduct pay equity analyses more frequently than annually
- Over half of all orgs analyse bonus (63%) and equity (55%) when applicable
93% of multinational companies conduct analyses in multiple countries. But companies take a variety of approaches:
- 43% conduct global pay equity analyses within each country (comparing employees to peers in same country)
- 24% conduct global between-country analyses (comparing employees to peers in different countries)
- 20% conduct both within and between-country analyses
Trend 3: Diversity goal-setting is falling short.
Nearly all companies (93%) have diversity goals but many don’t have a concrete plan to achieve them. Companies must follow through on their DE&I commitments by clearly demonstrating how equity functions within their organisation and pointing to specific examples and data. Achieving lasting change requires setting measurable, data-driven diversity goals, creating specific action plans to achieve them, and being transparent about progress in order to increase accountability and trust.
In June 2022, the EU passed legislation setting quotas for the number of women on boards. Listed companies across all twenty-seven countries are now required to have 40% female representation of women on boards, or if companies choose to apply the quota to executive positions too, they can reduce their target to 33% of executive and non-executive roles by the middle of 2026.
Real change is driven from the top down, and these recent regulatory changes to the gender make-up of company executive boards will help cement the direction of travel and provide increasing numbers of role models. Quotas have limitations, but that doesn’t mean quotas don’t have a meaningful role to play. Making real progress often requires a target. Ensuring accountability requires measurement.
Many companies are setting external goals without adequate accountability to actually achieve them due to no internal supporting plan and a lack of transparency.
- 93% of companies have some type of diversity goals.
- 41% of companies that set external diversity goals have no supporting internal goals.
- 48% do not agree that there is meaningful accountability at the leadership level if workplace equity initiatives fail.
- 45% do not agree that there is enough information shared externally about workplace equity outcomes for meaningful public accountability.
Trend 4: Companies are feeling the push for transparency globally but few are actually prepared.
There are already pay reporting laws across Europe, including new laws in Ireland, while Germany, France, Iceland, the United Kingdom, Switzerland, and several other countries have regulations around equal pay for equal work and the gender pay gap.
Leading companies are delivering on the call for transparency by going beyond what’s legally required and voluntarily disclosing a range of DE&I, pay, and workplace equity metrics, transforming these topics from a potential liability into a brand advantage. And while 28% of companies with a European presence are currently voluntarily disclosing their adjusted pay gap, 25% more plan to in the next 12 months; for the unadjusted pay gap, 20% are currently voluntarily reporting and 31% plan to in the next year.
The snowball effect, as workplace equity metrics become increasingly common, increases stakeholder expectations that most companies need to be publishing their workplace equity metrics. However, many companies in Europe are not yet on the glidepath to establishing the core capabilities to consistently and accurately measure them.
As workplace equity programmes mature, they share information and progress on goals more frequently. This adds increased accountability.
Of companies that are just starting out or building up their workplace equity programme, less than half (48%) share updates about progress at least quarterly. By the time their workplace equity programme reaches peak maturity, that number jumps to 92% sharing at least quarterly.
The key to levelling up your workplace equity programme? Data.
Leaders need to recognise that prioritising workplace equity efforts is effective capital allocation — valuing employees based solely on what they contribute, without bias, is an efficient and powerful way to foster trust and engagement.
Getting equity right at this point in time is essential to stopping costly gaps and challenges from being exacerbated when the economy starts to motor again. If executed well, workplace equity can be cost neutral, while ensuring that top talent is retained and motivated. If employees see clear paths for development, and that their company is committed to building effective, diverse teams, they’re far more likely to stay for the long haul.
Unlike the last recession, workers hold increased power and leverage. The pandemic took its toll on employee trust, highlighting complexities around hybrid work, spotlighting a severe lack of diversity, and complicating gender pay gap trends which had previously been declining. It is critical that leaders avoid stalling progress by undervaluing and overlooking talent from historically underrepresented groups.
Because workplace equity is multi-dimensional, data and analytics are key to painting the big picture view of workplace equity across your company. A Workplace Equity Analytics Platform can be hugely powerful for companies to both meet current challenges and measure and improve all areas of workplace equity in the long term — from bringing in diverse talent to compensating, retaining and promoting them fairly. Investing in technology takes an immense burden off HR, DE&I, and Total Rewards managers and saves significant costs in the medium to long term, especially as we see new pay transparency and ESG disclosure legislation and regulations emerging all the time.
Workplace equity is a journey of incremental progress over time and it takes analytical rigor, centralised communication, and cross-functional alignment to build a successful programme. By programmatically measuring and developing an equitable workplace, you can not only drive sustainable business outcomes, but much more importantly, prove that you treat every employee with the fairness they deserve.
Organisations have an opportunity to heal the strained relationship between employees and employers that’s been fundamentally transformed by Covid, a social movement, and a collective search for meaning at work. It’s a relationship that needs healing. Restoring that trust requires accountability through data and transparency
The percentages above were from the subset of survey respondents from companies with a significant presence in Europe. Want to read the 2023 Workplace Equity Trends Report with the full global dataset?