Putting Pay Equity Into (Your) Practice
Equal pay for work of equal value. That’s the definition of pay equity…a concept that eludes way too many businesses.
While 7 out of 10 companies report it’s critical, a new study from the Josh Bersin Company suggests only 5% of businesses do a good job of addressing it.
Tip: “This practice is often more complex than simply eliminating biases. Employers must weigh other factors, too.”
What does the term actually mean? The HR experts at ADP define pay equity as “the concept of compensating employees who have similar job functions with comparably equal pay, regardless of their gender, race, ethnicity, or other status.”
Sounds simple enough, but it’s not, adds ADP. “This practice is often more complex than simply eliminating biases. Employers must weigh other factors, too, like the employee’s education and work experience, the responsibilities of the position, and the organization’s long-term financial stability.”
Social Responsibility and More
Putting this concept into practice shows a sense of social responsibility. It’s also smart business. Why? Because, according to ADP, it can:
-Eliminate discrimination lawsuits
-Help you adhere to equal pay regulations
-Attract new talent
How to Analyze It
Tackling pay equity is no small matter, explains Josh Bersin, whose company by the same name is a leader in research, advisory services, and professional development for HR teams.
How do you analyze it? “You have to first take all the people in your company and put them into equivalent job categories or job classes,” explains Bersin. “Then, you do a statistical analysis of all the factors…that correlate with increase in pay.”
The result? It will help you keep compensation in line with your goals. It is, however, not a one-time task because, as Bersin told HR Brew newsletter, every hire, promotion, or raise impacts pay equity, so it must be an ongoing process.
Why does it matter? “When companies pay employees differently for the same work, it can negatively impact engagement, teamwork, and trust in leadership.”
Fortunately, there are tools to analyze pay equity (or inequity, as the case may be). He points to two in particular—Trusaic and Syndio—that can “help HR address pay equity in real time and flag employees who are over- or under-compensated.”
He predicts that “a lot of smaller companies are going to look for tools, and they’re just going to…put [their] pay increases into this tool and see if they’re good or not.”
The end result? “I think there will be a different way of paying people as a result of this,” concludes Bersin.
How do you address the topics of pay equity in your practice? Tell us about it and share in the conversation on Facebook here.
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