Addressing Pay Equity Issues in Your Company

Even before COVID-19 upended business models, there were growing societal pressures to do something about longstanding pay disparities among employees. The pandemic has only fortified that momentum, since employees have more say in terms of where they want to work, and why. So really, the issue comes down to talent attraction and retention, on which employers are focused. Here’s what you need to know about addressing pay equity issues in your company.

The Issue

Yes, after several decades, the U.S. is still dealing with compensation parity and pay gap issues. Two years ago, for example, women’s annual pay was 82.3% of men’s — a chasm that is even bigger for women of color, according to Thomson Reuters.

There’s also a push for organizational diversity, equity, and inclusion (DEI) initiatives, and to tie gains in those areas to executive compensation.

But Aren’t There Laws?

Yes, there are. There’s Title VII of the Civil Rights Act of 1964 and the Equal Pay Act. There’s also the Lilly Ledbetter Fair Pay Act of 2009, and the Paycheck Fairness Act, which U.S. lawmakers are still considering. Moreover, a handful of states have modified legislation to increase salary transparency.

There have also been growing efforts to prohibit employers from asking a job candidate their salary history to help discontinue the perpetuation of inequities.

Despite all that, though, the situation is what it is: still in need of remediation.

The Argument for Transparency

For the employer, dealing with pay inequity claims can be challenging. Such claims can involve legal, HR, compensation, and perhaps even employee relations. The other side of that is that bringing in such allies can help you deal with such complaints, about which you must do the right thing. But you’ve got to face these allegations head on.

What Can Employers Do?

There are some things to consider, and some actions you should take, when grappling with how to handle pay parity and a

To wit:

• Know that word gets out. In the past, all you had to do was make it known that you expected employees to keep their pay to themselves. Now, with online forums and the like, you can assume that your compensation strategy will be outed. So, it’s best to be open and transparent from the jump.
• Act swiftly to address issues. If an employee is claiming pay inequity, you want to loop in all the people and departments above so that the issue can be properly investigated.
• Learn what other organizations are paying. Employees uncover such info; you should, too. In your investigation, you should also use similar in-house job roles as comparators.
• Communicate findings appropriately. Get your communications team involved so that you can effectively and properly report investigation findings to the organization and employees.
• Bring in legal. You want to do this to help with employee pay equity concerns as well as the results of a pay audit.
• Analyze pay grade. In so doing, you should account for job responsibilities and duties, education, experience, the region in which they work, etc.
• Make sure your managers are well trained. To ensure enduring progress, it’s vital that you train managers on pay transparency.

The bottom line is that addressing pay equity issues in your company, and ensuring fairness in rewards requires deliberate action. To make sure what you’re doing is impactful, you should consider a working with a firm such as Mercer which combines consulting and technology with analyses helped by a proprietary pay equity calculator. They can help you review pay gaps, give you remediation options, and evaluate the impact of your actions.