Bias influences nearly every compensation decision. This is because decisions are made by humans and all human decision making is biased. One global organization found that non-male, non-white employees were paid less than their male, white counterparts. An analysis revealed that many of the leaders making these pay decisions were among those getting paid less—non-male and non-white managers themselves. Despite good intentions, bias is pervasive.
According to MIT Management Sloan School, “To a large extent, gaps persist because of unconscious bias. Despite decades of diversity programs, hidden assumptions and beliefs in stereotypes still influence hiring, promotion, and compensation in subtle yet substantial ways.”
Solving for pay bias takes more than anti-bias training. Humans need explicit information and guardrails to guide their compensation decisions. This is why we built Pay Finder, a new software solution designed to eliminate bias in pay decisions and ensure salaries are competitive and equitable from the moment of hire. Pay Finder is unique because unlike other “solutions” for pay inequity, it’s designed to prevent problems, not find and fix them after the fact.
Making the Shift to Prevent Pay Disparities
Equal pay for equal work—also known as pay equity—is not only required by law, but it’s an implicit promise organizations make to their employees. When companies don’t pay people fairly, they risk litigation, brand damage, and negative employee perceptions that impact hiring, engagement, and retention.
Yet, pay inequity is commonplace. According to Gartner, pay gaps that can’t be explained by legitimate reasons like performance or experience average 7.4% across organizations.
Companies have historically had to accept pay inequity as the cost of doing business, setting aside hundreds of thousands or even millions of dollars annually to resolve pay inequities that they know will arise. And because disparities have become a foregone conclusion, their strategy is to perform annual analyses led by external legal teams. These assessments are designed to mitigate risk, and do nothing to address the root cause of the problem.
Accepting defeat isn’t the answer. According to Gartner’s “Addressing Pay Equity” report, organizations need to shift their approach—specifically, to “prevent the creation of pay gaps throughout the compensation life cycle rather than only assessing and correcting existing gaps.”
Introducing Pay Finder
Pay Finder enables businesses to make this shift. Pay Finder doesn’t simply tell you what salary to pay someone (though it can be configured to do so.) Rather, it serves up insights and recommendations based on what is externally competitive and internally equitable, guiding pay decisions and removing bias.
“Our priority is to be proactive to prevent pay inequities from occurring in the first place,” said Frank Stoos, Director of Executive Compensation for TE Connectivity, a global tech company with 80,000 employees. “Relying on market rates and human discretion to set starting pay is not enough; you need to have an understanding of what’s internally equitable. Syndio’s Pay Finder enhances our ability to see what’s competitive and fair from day one. It helps us to do the right thing for our employees, and it reduces or eliminates the need for remediation actions by maintaining fair and equitable pay.”
For companies who want to go from fixing pay inequity to preventing it, Pay Finder enables you to:
- Determine salaries that are competitive and equitable. By surfacing your internal (market-informed) pay ranges next to a “fair pay” range for every new hire (based on other employees doing similar work), Pay Finder helps you craft offers that are competitive and fair.
- Predict the impact of salaries on pay equity. Pay Finder lets you predict how different salaries will impact pay equity. This helps you make real-time adjustments that prevent pay disparities before they can arise.
- See real-time salary trends. Pay Finder pulls in salaries for recent hires and all existing employees in a group doing similar work, so you can explore real-time pay trends and make more precise pay decisions.
- Customize views for different users. For most new hire offers, recruiters need a simpler set of insights to make good pay decisions. Pay Finder lets you customize and simplify the view you show to them, streamlining offer creation while still ensuring fair pay.
Equitable compensation is a brand imperative every day, not once a year. It’s also a core tenet of a well-run business, not a compliance exercise. Pay Finder gives you a simple path to transform your approach to pay equity, incorporating fairness into everyday business practices and pay decisions. For leaders looking to live the values of your organization, and differentiate your brand, and lead the way in fair pay, learn more about Pay Finder here.