I recently had the pleasure of participating in a panel discussion hosted by WorldatWork for their Equal Pay Day webinar, Equity 2023: Charting a Course to Success. The other panelists and I discussed a wide range of topics, from why companies struggle with implementing equal pay programs and policies to how they can create an actionable plan for equity in their workplaces.
We also each shared where we stand within our own organization when it comes to pay and opportunity equity. At Syndio, we’re proud to publicly share an in-depth analysis of our own pay gaps unmatched by anyone else in our industry. We walk our talk and it’s critical to building trust with our employees and our customers.
There were quite a few questions asked in the chat that we ran out of time to address. But your questions deserve answers! Below is a Q&A to close the loop on your WorldatWork pay equity panel questions: the Syndio team has answered the overarching questions in each main category along with some helpful resources for more information.
Looking for a partner to help you meet increasing demands for pay equity and transparency? Leading companies are turning to Syndio for a powerful, purpose-built pay equity solution that empowers you to solve pay equity issues now and prevent them in the future. Get a demo to see it action.
1. Pay equity and pay gap definitions
My organization is now struggling to differentiate pay equity from internal job equity. How do you define each of these critical comp terms?
Pay equity is about making sure people performing the same job with similar skills, effort, and responsibility are paid the same regardless of gender, race/ethnicity, and other factors otherwise unrelated to the job. Internal job equity (or opportunity equity) means giving all employees the same chance to advance in skills and responsibility without bias based on gender, race/ethnicity, or other irrelevant factors. Taken together, pay equity and opportunity equity to add up to what we define as workplace equity: Unlocking opportunities for every employee by treating them equitably and without bias at every stage of employment.
How do you think about differences in job performance of people with the same job title?
It is okay to pay people differently as long as it is due to neutral, objective, and observable differences in how the job is performed; for example, performance that is measured (e.g., surpassing sales goals), acquired skills, experience expressed as time in a role, or specific job-related experiences (e.g., experience managing a team).
What is the adjusted vs. unadjusted pay gap? // Why is the uncontrolled pay gap important to consider?
An adjusted pay gap (sometimes also called a “controlled pay gap”) measures the difference in earnings between two populations, after grouping employees into comparable groups and statistically accounting for measurable, neutral factors that may account for differences in compensation, such as tenure or management responsibilities. An unadjusted pay gap (sometimes also called an “uncontrolled pay gap”) measures the overall difference in mean or median earnings between two populations, without statistically accounting for factors based on measurable characteristics such as tenure or years of experience.
The uncontrolled pay gap matters because it reflects the fact that pay equity alone is not enough to explain the earnings gap between men and women — it’s also driven by a web of systemic opportunity inequities such as promotion gaps, inequitable representation in higher-paying leadership roles, and biased hiring practices.
What is the opportunity to fix if the controlled pay gap is essentially zero?
If a controlled pay gap is 0, then that means that there is no difference in pay between people in similar jobs with similar skills, effort, and responsibility. However, if the pay gap has been calculated at the highest organizational level (e.g., the company states that it has a 0 pay gap), it is still possible that there are pay gaps within smaller groups across the organization. We recommend that companies conduct deeper analyses to ensure they have truly achieved “0 pay gap.”
2. Global pay equity legal regulations and compliance
My organization is looking at pay equity plus the legal/compliance perspective for U.S. and international — how are both integrated together to ensure compliance?
Companies often begin by addressing necessary compliance and build on that to ensure they are addressing the fairness of their rewards and ensuring access to opportunities. The combination of Syndio’s highly-configurable platform and the expert guidance provided by our team allow companies to create a strategy that fully integrates global compliance across their rewards programs. Syndio has also published extensively on laws and regulations in varying jurisdictions/countries in support of our many customers (see Related Resources below). Collectively, these resources offer guidance and information, supplementing the tracking and reporting tools and advice that Syndio provides. Ultimately, actual compliance by each employer is determined by their own actions on a range of fronts such as deploying appropriate strategies, tools, analytics, process changes, reporting, and communications. There is no one-size-fits-all approach — it will potentially vary between countries depending on each employer’s individual strategy. Syndio customers use our software to help comply with all U.S. jurisdictions, and to conduct regression-style pay equity analyses across the globe. Syndio offers Global Pay Reports to help customers comply in jurisdictions outside the U.S., as well.
How does pay equity software keep up with changing regulations or remain compliant with OFCCP?
With Syndio’s unique combination of best-in-class software and expert support, Syndio can help contractors conduct both privileged pay equity reviews and compliance-focused reviews in compliance with OFCCP regulations and rules, including directive 2022-01. PayEQ empowers organizations to analyze, resolve, and prevent pay disparities due to gender, race, ethnicity, or any other demographics and is also the ideal solution for OFCCP reviews. The software lets you create multiple, separate “workspaces,” including one for each AAP.
How do you work on pay equity where legislative changes within states/municipalities change rapidly? How does an organization stay in compliance?
Syndio customers use our PayEQ pay equity tech software to help them comply with pay equity requirements across all 50 states.
Any tips on how to keep up with all the new laws and regulations being introduced? Is there a good source we can use?
Yes, see the Related Resources below, which Syndio constantly monitors and updates.
- Global Pay Reporting Laws Cheat Sheet
- U.S. Pay Scale Transparency Legislation Cheat Sheet
- Be Prepared for EU Pay Transparency Requirements
- EU Equal Pay and Transparency Directive FAQs
- UK Gender Pay Gap Reporting Laws: Quick Guide
- Highlights from the Senators Behind the New York and California Pay Transparency Laws
- The Revised OFCCP Guidance: How You Can Demonstrate Your Compensation Compliance and Maintain Attorney-Client Privilege
3. Pay equity analysis controls
Should education and experience impact what we pay employees who share the same job? // Pay equity with skills-based compensation – how do you see the challenges?
We know organizations pay a premium for skills, particularly within certain groups. In the U.S., pay equity laws specify that similar skills are one of the key characteristics defining "similar work" for determining which employees are comparable.
Two challenges come to mind when discussing skills in a pay equity setting. First of all, organizations may have a policy or a practice of paying a premium for certain skills — but that policy may not be equally applied. For example, certain employees may negotiate a pay premium because their skillset is in particular demand, while others with the same skills may not negotiate the same premium. This brings up a theme in pay equity work: inconsistency in the application of pay policies can lead to inequities in outcomes.
The second challenge is about the data companies collect around skills. In our experience, there is substantial variability in the amount of information organizations have about skills in the workforce that they can incorporate into a pay equity analysis, but the vast majority of organizations do not have all the data they wished they had.
So, where does this leave us? Organizations may suspect that their policies are inconsistently applied — perhaps in a way that disadvantages women or other identity groups — but they typically do not have the right data at their fingertips when they start. What that means is that organizations should be targeted and intentional about collecting data. In practice, this means identifying the groups of employees where skills are rewarded and targeting data collection in those groups. One potential pitfall is only applying a flag to employees who are outliers as far as pay is concerned. For example, upon review of outliers among a group of software engineers, an organization may find that many of the outliers work in cloud computing, and so they want to flag individuals with those skills. The proper approach is to flag all employees with that skill — not just those who are highly paid because they have that skill.
When addressing pay equity, the data tells half of the story. What suggestions do you have for gaps in an employee's prior work experience and skills? Also, when assessing performance, not all employees who receive a performance rating of 'meets' are actually the same; suggestions?
This is a great question — I’d rephrase the first half to “half the data tells half of the story”, since this is related to data that an organization may not have available (such as skills and prior work experience). The short answer is that you will likely want some data you do not currently have. In some cases, there are good workarounds (e.g. age minus company tenure minus 18 or 21 as a proxy for external experience), and in others, you’ll want to do some additional data collection.
See our recent blog article on the data you do and do not need to get started. The good news is that trends in the data you do have and analyses of outliers can help highlight gaps in your data, similar to how finding one piece in a jigsaw puzzle gives you information about the next piece you may need.
To the question of performance and potential assessment, this is a great point. We recently interviewed Dr. Alan Benson on how bias in “potential” ratings keep women from being promoted and contribute to the gender pay gap. Using a biased control may explain pay differences, but it is always worth interrogating what specific controls mean. If women receive lower pay because they are receiving lower performance ratings, a pay equity model using ratings as a control may not flag a significant gender-based difference. In our pay equity solution PayEQ, we perform a statistical decomposition of controls to identify if and whether the control has a different impact based on the identity group of interest.
Why are we, as the leading compensation professional association, quoting the 14% pay gap, which doesn't account for differences in roles, experience, and skills? When accounting for those differences, the pay gap shrinks significantly. Is it not important to state the problem accurately?
This is a fair point, though I would not say that the 14% pay gap figure is inaccurate. Rather, I would say that it represents multiple issues at once, including pay equity (equal pay for similar work), opportunity equity, and occupational segregation. For example, when we discuss the gender pay gap, we should acknowledge that pay equity alone is not enough to explain the earnings gap between men and women. Estimates vary, but I’d estimate that women’s average earnings would be three to seven percentage points closer to men’s if equal pay for equal work were a reality. But these other issues would remain, and we can address those issues as well — some of those at the company level (e.g. by ensuring equal opportunities for development and promotion.)
What factors do you consider with your controlled pay gap? // Can you please tell us which factors you are considering when performing an analysis (e.g. highest level education, related experience, total experience)?
Factors should be neutral (meaning they apply equally for men and women) and job-related. Good controls also meaningfully describe why certain employees earn more than others. Common controls are management responsibilities, job tenure, and location. Frequently we see customers apply different controls based on the employees in question. For example, education may be relevant on your data science team, but certifications and experience are more important for forklift operators. Our software PayEQ allows custom application of controls at the group level.
There are other concerns you may have around controls, some technical (e.g. are two controls collinear?) and others conceptual (e.g. "Do we think our performance ratings may be biased?"). It is key to think critically when choosing and applying controls, and an experienced partner can help ask the right questions to get to legitimate controls.
4. ‘Pay for performance’ or performance ratings as a control
How do we wrestle with shareholders’ needs for "pay for performance" and the differentiation that results from that strategy? // How should poor job performance factor into a pay equity assessment?
Most companies say they pay for performance, and pay transparency will put more pressure on how, exactly, companies are rewarding performance. While it is permissible to differentiate pay based on performance, companies need to analyze and monitor that they are doing this equitably.
Performance ratings are often used as a measurement of performance for the purposes of differentiating pay, with higher performers earning more than lower performers. While they may be used as a control for explaining pay differences in pay equity analyses, there are typically concerns that performance ratings may not be administered equitably. Syndio advises that companies analyze performance ratings for potential bias prior to using them in a pay equity analysis, and we help companies with this analysis.
If performance ratings can’t be used in a pay equity analysis, we advise using other indicators of performance, which may include a flag for high potential, special project assignments, or other performance indicators that exist in your employee data.
The pay equity analysis helps companies pressure test how well they are executing on their performance management programs. One can test directly whether performance ratings and other indicators result in differentiated pay. With this knowledge, companies can then understand what they need to do — for example, provide better training for managers, clarify guidance around rating performance and differentiating performance with pay, and refining the performance management program design — to ensure a stronger relationship between performance and pay.
5. Pay equity analysis methodology and remediation
Do you recommend a pay equity goal for organizations on an annual basis to help shrink the gap? // Are pay equity adjustments something that should be "given out" constantly or something on a schedule like once a year?
When you’re tied to an annual merit cycle, it’s easy to get stuck in a zoomed-in view of your compensation adjustments, embedding pay equity adjustments with merit increases and saying, “That’s good enough for now, until next year.” But workplace equity is multi-dimensional. It requires thinking about the big picture of equity throughout the entire employee lifecycle and across every form of reward. It requires ongoing monitoring and maintenance, not just an annual scramble to fix the issues that reappeared over the past year. It requires coordination and consensus between multiple stakeholders in the organization beyond Total Rewards/Compensation — including HR, DE&I, Talent Management, Comms/PR, and Legal — to build a holistic workplace equity strategy that encompasses every “moment that matters” for employees, from hiring to retiring, across the entire employee experience.
Syndio’s customers are finding success by:
- Going beyond pay equity to dig into how pay is being delivered, prioritize areas for change, and model new scenarios
- Using pay equity as the foundation, then moving to longer-term strategies for modeling and testing the pay program changes
- Leveraging their pay equity analyses for pay decisions to prevent inequities, and to inform pay ranges for job postings so the ranges are both competitive and internally fair
- Working to unpack drivers of opportunity gaps so they can better enable opportunities across their organizations
By shifting to a proactive approach that uses data to embed equity into every employment and compensation decision year-round, perhaps we can even move away from an annual merit cycle. Rather than running through the same process of remediating inequities year after year, building momentum behind an ongoing workplace equity program can help power a better day-to-day employee experience.
The root causes of inequity don’t hit the pause button once you close out your annual merit cycle. That’s why one of the most fundamental shifts that Syndio is starting to see is a move to more frequent pay equity analyses, whether that’s every six months, quarterly, or even more often than quarterly. With the support of technology, employers are embedding periodic analyses throughout the year to ensure they are monitoring the outcomes of compensation changes. By shifting from a reactive, point-in-time correction to an ongoing, proactive adjustment process, organizations can stay on top of the state of equity in their company. This reduces the likelihood of requiring substantial changes (and budgets) to remediate equity during the merit cycle.
What’s the most effective way to reduce statistically significant T-values that flag each comparison group (I.e. job family group)? Do we remediate those with the highest studentized residual within that flagged job family group?
Syndio’s best practice recommendation is to provide adjustments to all members of the underpaid protected category (e.g., women) who make less than their predicted pay in the regression model. Adjustments should be applied proportionally to these individuals until the group’s status (as measured by p-value, SD, or T-values) is no longer statistically significant. See this whitepaper on pay equity methodology for more info.
How do you start a pay equity analysis with raw pay to include salary, bonuses, commission, and stock equity? // What is a good measure — assessment of pay equity at the base salary or total compensation?
Syndio’s best practice recommendation is to analyze total compensation to assure that you’ve assessed equity in all areas where discretion is possible. However, the majority of companies start by analyzing base salary as it’s a simple measure that can help address most disparities, since most other compensation is derived as a percentage of base salary. But with the aid of purpose-built pay equity technology, it’s becoming much easier to bring other forms of rewards, such as variable pay, target bonuses, and equity/stock grants, into the equation to ensure that the full range of employee compensation is equitably distributed.
When ready to look at other compensation elements, Syndio customers typically look at these both in combination with base salary and in isolation. They configure their analyses to align with the design and intent of the compensation elements.
How can a pay equity analysis be used internally as a pulse check in other areas?
A pay equity analysis can be useful in helping you assess the impact of a business change such as a new job architecture framework or merger/acquisition. Companies can model the new pay rates for impacted employees to determine if there are any gaps between protected categories that suggest further work needs to be done before implementation. See these steps for building your job architecture and ensuring pay equity all at once.
Are you seeing a one-time budget adjustment needed to address pay equity and then after that, a regular budget?
The remediation from the first pay equity analysis is typically the largest. In subsequent analyses, you may have small adjustments to make to correct for changes in pay and employee makeup since your last analysis. Syndio also supports companies in identifying root causes — for example, disparities in new hire offers — that may be driving pay inequities to help address systems and processes to further minimize adjustments from one analysis to the next.
If you see a pay gap and see that it has been in play for a number of years — do you adjust retroactively or provide a one-time raise?
Most companies will give a raise to correct current pay and continue to monitor that no issues occur going forward. Based on the advice of legal counsel, there may be scenarios where you would award back pay as well.
If you have a limited budget, how do you best prioritize adjustments? // Our leaders have a limited budget to remediate their pay inequities the compensation team identifies. How should we help these leaders prioritize their efforts?
Some companies may prioritize groups with the larger headcount or the larger percent gaps to have the greatest impact, while others focus on groups with a history of complaints or other areas of concern. Legal counsel can help you assess risk and determine the best way to prioritize.
Is there a time limit to the phasing out of the comp adjustments to close the identified gaps?
In some legal jurisdictions, time limits can apply. Consult with local counsel to help understand the regulations that apply to you.
Will job evaluations such as the Hay system make a return?
Formal job evaluation methodologies like Hay are very helpful when conducting pay equity analyses, as they provide objective criteria for understanding the similarities and differences between jobs. Many employers still use these methodologies as part of their pay equity analysis approach.
How do you reverse slow movement through ranges and new hire compression?
Within a pay equity analysis, factor in range penetration or compa-ratio when deciding pay equity adjustments to ensure employees stay within range. For new hires, leverage a tool like Syndio’s PayEQ Pay Finder, which highlights recent hires. This can help you assess if recent hires have received offers at or above the high end of the range, meaning you’d need to either adjust your ranges or rein in your offers.
How can we address pay differences in commission vs. non-commission roles when looking at pay equity across different roles? Many commission-heavy jobs tend to be male-dominated resulting in a gap to roles that are the same level without commission.
For a pay equity analysis, we compare employees who do substantially similar work, determining if employees in comparable roles are being paid fairly relative to one another. In this case, employees in commission and non-commission roles likely wouldn’t be compared to each other as they would be determined to have different jobs. However, if an organization considered them to be in similar jobs and eligible for comparison, our team would work with you to determine how best to calculate pay in a manner that could be compared (e.g., estimating commissions based on an average across performance periods to derive an annualized compensation for comparing to salaried roles). An assessment of opportunity equity would then help assess representation in these roles to determine if there’s an overall pay gap driven by higher concentrations of one demographic in higher paying roles. Together, both analyses would help you to uncover potential barriers to workplace equity.
How does a pay structure actually help with pay equity?
Having clear guidance for hiring managers and people managers helps them make consistent decisions about pay across your organization and minimizes the opportunity for bias.
Is there a toolkit you can share for us to complete a pay equity study?
Check out this resource on how to analyze pay equity
How far back do you have to pay employees retroactively (in Canada)?
Your legal counsel can help you assess your retroactive obligations.
- The Data You Do — and Don’t — Need for Your First Pay Equity Analysis
- When It Comes to Pay Equity, Methods Matter
- 8 Types of Workplace Equity Analysis
- How to Set Salary Ranges that Are Useful, Fair, and Explainable
- Choosing a Sample Size Threshold for a Pay Equity Analysis
- [White paper] Comparison of the Three Most Prevalent Pay Equity Analysis and Remediation Methods
- Build Your Job Architecture and Ensure Pay Equity All at Once
- How to Think Beyond an Annual Merit Cycle When Embedding Workplace Equity
- How to Analyze Pay Equity
6. Local vs. global pay equity analyses
What is the best way to analyze pay across different geographic pay locations?
Many global companies are held back by wondering, “How do we even begin?” With multiple locations, currencies, pay policies, and legislation to account for, global analysis can seem daunting. Syndio’s PayEQ software provides built-in functionality to help companies account for all of these complexities so that you can run a robust statistical analysis across your global employee population.
Often, global organizations use the Syndio platform to set up workspaces by country so they can conduct country-by-country analyses (as that's typically how pay is managed, at the country level). Some organizations begin by focusing their analyses on the countries in which they have the largest populations. Our platform can be configured to account for location within larger countries where there are differences in pay by city or region. They simply add location as something to control for when conducting the analysis. Our platform also allows them the flexibility to conduct in-depth analyses across different compensation elements and apply both "universal" controls as well as controls that are more locally relevant. Country-level analyses allow our clients to meet local reporting requirements by allowing them to configure workspaces to conduct analytics per local legislation.
Additionally, our clients like to have a single workspace with the global population, using our currency conversion and log normalization functionalities so they can have analytics for broader communications around fair pay. We often work with our global clients to help them craft and deliver communications for leadership and broader HR teams, as well as participate in the delivery of communications to employee groups as needed.
Also, it’s okay to start with a smaller focus and then scale. Companies who are not yet ready to do a global analysis for other reasons can begin by prioritizing the countries where they have the most employees or more active pay equity legislation. After developing and refining their pay equity analysis processes with those countries, they can then roll out a global program by onboarding other countries over time.
How does geography play into pay equity? In the U.S. some geographical areas have more minorities. How can companies consider the systemic issue that geography may play into pay equity?
This is an opportunity for companies to look beyond pay equity and also examine opportunity equity. Understanding representation within your workforce, available talent, and how they intersect — both from internal mobility as well as an external talent pipeline perspective — can help you take action to ensure both pay equity and close the pay gap that exists at your organization. Learn how Syndio’s platform helps with all of this.
How do you manage pay equity for expats and locals in developing countries?
Companies may pay people in the same roles differently based on the circumstances of their employment. While differences can be explained, companies use pay equity analyses to understand the prevalence of the practice, the scale of the differences that exist, and whether this aligns with their compensation philosophy. Then, depending, they are able to make adjustments as needed.
We used to benchmark pay based on city (geo pay scales). How are people adjusting geo structures now given massive growth with remote workers?
In working with our customers, we have seen companies examine pay across geographies and between in-person and remote workers as they reconsider how they are defining the market for certain jobs. The analyses allow them to better understand pay practices so they can make changes as needed to reflect the market, and this may result in less differences based on geography.
7. Pay equity tech
What tools/vendors are people using to evaluate pay equity? // Is there a tech solution around pay equity , which helps Compensation leaders to check it on a real time basis with new hires joining and exits and to make decisions during annual appraisals and during the new hiring process?
Over 275 of the world’s leading brands rely on Syndio’s pay equity solution. By automating the process of analyzing compensation data and identifying potential disparities, our PayEQ software can provide accurate and actionable insights into an organization’s pay policies and practices.
PayEQ gives you immediate insight into pay disparities, with the flexibility to easily make changes, including ignoring certain employees, and generate a new analysis instantly. It also provides insight into the root causes of pay gaps and how to revise your policies and practices so that you prevent pay gaps from arising in the future. Pay EQ helps companies set equitable salaries at every step of the employee lifecycle, from new hire to promotion and transfer, using both internal and market data. Advanced budgeting tools allow you to incorporate your compensation philosophy into your remediation plan, plus you can easily adjust amounts to fit your budget and time frame.
Additionally, while a self-serve, low-cost solution might seem attractive, it’s not the best approach for something as important and complex as pay equity. You need access to proven approaches and guidance around groupings, controls, remediation, root cause analysis, and other features that strengthen the analysis. With Syndio, you get access to our team of seasoned, in-house experts in labor economics, workplace equity, data science, employment and labor law best practices, DE&I, and global pay equity.
What does a good pay equity solution look like?
Due to potential legal ramifications, the need for compliance with transparency legislation, and the impact on employee and investor relations. “good enough” is good enough when it comes to pay equity. Companies need to select a pay equity tech solution that not only serves their immediate needs but also meets long-term objectives. This means investing in a tool that is backed by legal expertise, is purpose-built for pay equity, includes ongoing expert support, and tackles problems at their root.
Whether you're looking to complete your first analysis with pay equity tech or are hoping to revamp your existing process, it's important to ask the right questions when evaluating all your options. Use this list of questions to guide your process and help you make the right decision for your business.
- 25 Questions to Ask When Evaluating Pay Equity Tech
- 5 Learnings from Gartner® About the Importance of Pay Equity to Talent Retention — and How “Techequity” Software Can Power Progress
- Pay Equity Solutions Comparison
- The New Way to Fair Pay: How to Master Pay Equity in a Changing World
- “Good Enough” Isn’t Good Enough for Pay Equity Software
8. Representation and opportunity equity
What suggestions do you have for industries that certain genders tend to gravitate towards (e.g. Nursing tends to have more women and Engineering tends to have more men).
Syndio’s platform helps companies address the issue of representation through our OppEQ functionality. We help companies analyze available talent both internally and externally so they can understand how to better source the talent needed for better representation at their organizations. While occupational segregation has been a reason for underrepresentation in the past, leading companies have been more proactive in finding new ways to source talent. This has led to an increased focus on skills development and new ways of cultivating internal talent pools.
How do gender roles in the home impact the pay equity gap? In many cases, women are still shouldering a lot of domestic responsibilities. There is only so much a person can manage so it is possible women can't work the extra hours or take on the extra work to get the exposure to get the promotion.
More companies are going beyond what is required by legislation to conduct analyses that address issues like the impact responsibilities like caregiving are having on pay equity. In our 2023 Workplace Equity Trends Report, we found that companies are increasingly looking at caregiver status as part of their analysis.
What is the best approach to capping a promotion? We just implemented a pay philosophy and structure a little over a year ago. Managers weren't used to any structure at all and they're not keen on capping someone's pay for fear of losing them.
Companies can approach this in two ways. First, ensure that pay is being set based on the value of the job, not on the percent of the pay of the person being promoted into the role. This puts the focus on pay for the job and how it is valued in the organization. Second, be clear on how you are using your ranges to structure pay in a manner that is both internally fair and externally competitive. Companies typically define areas within each range and the expectation of how employee pay is targeted based on their role, experience, and performance. For example, someone newly-promoted to a role is often in the lower end of the range. Once they have more experience and are more competent in the role, their pay should be increased to the middle of the range, as it represents what is competitive to pay someone in that role.
9. Pay transparency, communication, and education
How is pay transparency helping the pay equity cause?
Pay transparency is creating a situation in which applicants, employees, and the competition all know how a role is valued at a company. This reduces the opportunity for negotiation and puts pressure on companies to ensure they can clearly explain how they value roles. This leads to less discretion in decision-making and may increasingly result in people in similar jobs with similar skills and responsibility being paid similarly. Transparency is focusing pay on the value of the job, not an individual’s history, gender, race/ethnicity, or other characteristics that are not job-related.
What suggestions do you have for approaching conversations with employees on the topic of new pay transparency laws — whether it be from a management or HR perspective?
This is a great opportunity to discuss the company’s pay philosophy and have frank discussions about how the company sets pay and what the company rewards and values. HR teams are helping managers clearly explain why employees are paid what they are paid (e.g., how the market is defined, what is considered competitive, how pay is managed in the ranges, how skills are rewarded differently), how they can earn more, and how they can grow in their careers. Leading companies are providing education, answering employee questions, and ensuring the discussion is also about employees' opportunities for growth and their careers. They are also ensuring employees can continue to ask questions and that the conversation is one that is ongoing and authentic.
How do we explain the gap between employee expectations for pay equity, limitations of merit budgets, and increasing inflation being greater than the available merit budgets?
There is a gap between the raises employees expect this year and what companies have budgeted. This LA Times article states, “Some of that disconnect stems from people mistakenly assuming that their employers would deliver raises in line with inflation, but in the current price environment a cost-of-living boost isn’t realistic in most cases. The fault also lies with employers for keeping their compensation practices deliberately opaque for years.” Greater pay transparency and pay explainability are key so that employees understand why they’re paid what they’re paid. Syndio’s Workplace Equity Communications Playbook can help you build a communication strategy for the pay transparency era.
Do we already see what effects pay transparency is having on how Reward professionals create salary ranges? Less overlap of pay ranges? Narrower salary ranges? // Is pay transparency causing organizations to widen their pay ranges?
As companies start posting salary ranges publicly to comply with new pay transparency laws, some companies are posting ranges so wide that they fail to be useful for job candidates (and worse, give the impression to candidates and current employees that they’re hiding something). This is likely often because many compensation professionals are still taking a traditional approach that was meant for managing pay — not talking about pay. Ideally, salary ranges should be externally competitive, internally equitable, and based on factors that are easily explained to employees who might question them.
To improve “pay explainability”, we believe that we will continue to see a narrowing of salary ranges to more job function/family or job-based, a move away from the broad grade range. This will be a big change — and it won’t happen overnight. This will require you to reexamine your compensation philosophy and design and shift from a one-size-fits-all approach to something that makes more sense for how employees think of their jobs and their pay. Learn more about how to set the right salary ranges in this blog article.
Would love to hear more about how companies are talking about this with employees, what best practices are there around communicating pay equity and pay transparency?
We’ve compiled best practices for communicating about workplace equity in the era of pay transparency in the Workplace Equity Communications Playbook, which includes strategic advice, real-world examples, and a transparency roadmap.
How do you change the culture around pay equity with companies that still operate in a traditional fashion? // Have we measured anywhere the impact of leadership stuck in their historical practices and how to modify that?
While 57% of respondents surveyed for Syndio’s 2023 Workplace Equity Trends Report believe their leadership is truly bought-in to their workplace equity initiatives, half of those do not agree that there is meaningful accountability at the leadership level if those initiatives fail.
Seizing the moment to pursue progress in workplace equity requires careful change management. While necessary to evolve, change of any kind can be uncomfortable and has the potential to trigger a backlash. Successfully pushing for workplace equity investment and efforts at your organization will require you to gain commitments from the very top — and achieving that level of buy-in will require you to build a compelling narrative founded on proof. Syndio partnered with Scott Cawood, CEO of WorldatWork, to offer 7 tips for structuring compelling workplace equity conversations with leadership. You can also check out this blog article on the ROI of workplace equity to help make your business case.
We’ve received the most questions about communication — not surprising! Below, we've provided you with a lot of resources, and our team would love to have a conversation about how we see leading companies successfully communicate in the pay transparency era.
- The Workplace Equity Communications Playbook
- 2022 Workplace Equity Communications Lookbook
- The Best of Workplace Equity Communications
- How to Convince Leadership that Workplace Equity is Critical to Get Buy-in
- How to Communicate About Workplace Equity to Your Board
- Comms 101: Navigating Your Median Pay Gap In The Transparency Era
- Pay Explainability: What It Is and Why You Need It Now
- How to Set Salary Ranges that Are Useful, Fair, and Explainable
- Rethinking Compensation Programs for Pay Transparency
- The Business Case for Workplace Equity
- 7 Expert Insights About Workplace Equity in 2023
10. Managing compensation to ensure pay equity
What is a healthy way to think about initial pay settings versus internal promotions? How do we set ourselves up to be effective?
When companies focus pay on the role — how it is valued both internally (e.g., through a consistently-applied job evaluation methodology) and externally — there is less opportunity for discretion and more adherence to compensation guidelines. Compensation decisions that are well-governed help to maintain pay equity as opposed to compensation decisions that are based on negotiation and manager discretion (with no clear line of sight to what is internally equitable). This means that employees who are promoted into a role are paid the same as a new employee who was hired into the role.
Traditionally, companies have not managed pay in this manner, but instead tend to base the salary for a promotion on an employee’s current pay as opposed to the value of the role into which they are being promoted. That’s why Syndio created a way for companies to effectively maintain equity using real-time data to guide every pay decision from new hire starting salaries to raises for internal promotions. Syndio’s PayEQ Pay Finder makes this easy. Pay Finder enables you to find the ideal salary — that’s both competitive and equitable — for every new hire, promotion, or transfer. And predictive pay equity insights allow you to enter any salary to instantly see its impact on pay equity, helping you maintain fair pay with every pay decision.
Prior pay from other companies is certainly a problem but so is prior pay within the same company when someone changes roles. It's important to pay for the job that's being done currently, not based on the job that used to be done. What are some best practices as it relates to not relying on salary history and ensuring pay equity?
Using past salary to explain salary differentials is not a valid defense in a pay equity case, but the commonly suggested workaround of asking candidates what they “expect” to make also comes loaded with the potential for inequity (and somewhat surprisingly, can often have worse outcomes than asking for salary history). Bringing salary history and/or salary expectations into the compensation conversation perpetuates cycles of pay discrimination that will set back any efforts an organization may be making to close their pay gaps. Learn more in our blog article on how to equitably discuss compensation with job candidates.
With pay transparency, there will be increasing pressure to ensure pay is for the role and the skills, experience, and performance needed for the role (as opposed to one’s salary history). This will help create trust with employees as there will be clarity around what and how the organization values jobs. This will also help to maintain pay equity and help retain employees.
11. Pay gaps and the public sector
Are there lessons to learn from the public sector about narrowing the pay gaps?
When there is complete transparency as we typically see with government roles, we rarely observe pay equity issues, as most folks are paid the same. Also, for many public sector jobs, the pay is formulaic and the product of level and tenure, with little to no room for discretion. It leaves open the possibility for systematic under-leveling — that is, while an employee cannot negotiate pay, there is discretion in whether they are level X or X+1.
Do you see government bodies or support programs from the government are slow to adopt pay equity initiatives?
Yes. While we do have customers that are municipalities at the state and local level, we do see slower adoption of pay equity initiatives in the public sector.
12. Attorney-client privilege
For the attorneys on the panel, do you recommend any internal pay study of employees be done only under the direction of house counsel to maintain attorney-client privilege?
The majority of Syndio’s customers today operate their analysis using our software platform under privilege with either in-house or external counsel. The process is simple and effective and Syndio will provide best practices specific to a legal team’s desired workflow.
Next steps for your pay equity journey
There was a lot of ground covered during WorldatWork’s pay equity panel, but on one thing everyone agreed: the pressure on companies to achieve and communicate about pay equity is not slowing down. Syndio’s expertise combined with a groundbreaking platform gives you the data and insights you need to meet this moment and build lasting trust with your people. We help you measure, prioritize, forecast, and report on every facet of workplace equity — from improving representation in leadership to paying, promoting, and retaining employees equitably.
Not sure how else we compare to other pay equity tech providers? Ask them the questions listed at the link below, and you’ll clearly see what sets Syndio apart.
The information provided herein does not, and is not intended to, constitute legal advice. All information, content, and materials are provided for general informational purposes only. The links to third-party or government websites are offered for the convenience of the reader; Syndio is not responsible for the contents on linked pages.