Pay equity is top of mind for most business leaders today. Investors are asking about it, employees are demanding it, and new legislation is making it harder than ever to avoid compliance issues. But how do you know you’re getting pay equity right for your organization? And what are other the pay equity best practices that top companies are following?
Our team gets these questions a lot, with many organizations hungry to know what their peers are doing about pay equity analysis, remediation, maintenance, and communication. So we surveyed forward-thinking companies and spoke to leaders in the space to identify top pay equity best practices.
1. Rethink how and when you analyze pay equity.
Completing a pay equity audit is not a new practice — but the way it’s being done is changing, and fast.
Companies are broadening their pay equity analyses across the board, moving from analyzing gender only to including race and increasingly age, disability, and veteran status too. They are also going beyond base pay to ensure the total package of compensation is equitable for all employees.
Companies are also analyzing pay equity more frequently, moving from once a year or less to twice a year, quarterly, or more. This is especially important at key business moments — like mergers, minimum wage increases, and re-organizations — that are likely to throw pay equity out of balance.
As Kate Bischoff, Attorney and HR Consultant at tHRive Law & Consulting, explained in the Fairness at Work: Episode 15 webinar, pay equity analysis also goes beyond just pay fairness. It’s a potential indicator of wider-spread inequity. She advises her clients that if they discover that bias is affecting pay, they should take a deeper look at performance reviews, working conditions, and how assignments are allocated.
2. Be prepared to fix (and prevent) the problems you find from your pay equity audit.
It’s not enough to simply be aware of pay inequity — companies must be prepared to address and resolve the issues they uncover. What’s more: pay equity is not a one-and-done initiative because disparities can come up at any time as your workforce changes throughout the year.
That’s why leading companies are starting to proactively budget for pay equity adjustments, with a significant increase in the number of our customers doing so in 2021.
In addition to budgets, companies are starting to take steps to prevent pay disparities from reoccurring by leveraging pay equity platforms that help them determine equitable salary ranges for new hires and model the impacts of any pay change before implementing it.
3. Show your commitment to pay equity.
Most companies have historically been afraid to talk about pay equity. They preferred to analyze and resolve issues under lock and key or, worse, do nothing at all.
Today, there’s a new trend — pay transparency. Pay transparency means sharing not only how you pay, but whether or not it’s equitable and the actions you’re taking to resolve issues.
Athar Siddiqee, VP of Global Total Rewards at Micron Technology, recommends that companies get their compensation to the point where they’re not afraid of salary sharing and they can defend the reasoning behind salaries for any and all employees. He says, “Companies who are resisting pay transparency are going to be left behind.”
Despite beliefs to the contrary, transparency can actually transform pay equity from a potential liability into a brand advantage. We even recently saw the first cohort of companies achieve Fair Pay Workplace certification as a way to demonstrate their commitment to pay equity.
As we head into 2022, it will only become more important for companies to determine how they will demonstrate and communicate their pay equity efforts both internally and externally.
A closer look at the data
Want more pay equity best practices? You can download the full 2021 Pay Equity Trends report for free to take a deeper look at the trends that will continue to shape the future of pay equity, how leading companies are addressing them, and what they mean for your business. Download the report here.
Also, if you missed the What Leaders in Pay Fairness Are Doing Differently: Top Pay Equity Trends from 2021 webinar, you can watch the recording here.
