We shouldn’t have to discuss the issue. There is literally no person on this planet who would argue that two persons doing the same work should be compensated differently, given that they produce comparable results. But in the daily reality of our workplaces, we still have a long road ahead in working towards reaching pay equity.
This is surprising because equal pay is for businesses more than just a legal obligation or a moral duty. Providing a compensation system that does not discriminate by gender, ethnicity, race, age, or any other characteristic creates tangible business results. It’s surprising how many organizations are still on the defensive when the issue is coming up.
What are the benefits of pay equity?
Equal pay is a strategic advantage in today’s competitive job market. Only employers that show equitable and socially responsible behavior will be able to attract and retain the best talent, foster an inclusive and supportive work environment, promote diversity, equity, and inclusion, and improve the organization’s brand image. They will benefit from higher employee engagement, better performance, more innovation, and being more attractive to investors. Raise your hand if your organization isn’t striving for exactly that.
Moreover, these organizations become beacons of positive change which reinforces the positive outcomes. But in this blog post, we want to be practical. We summarize how to overcome the hardest challenge of fairer compensation structures and apply five impactful measures.
What is the challenge to get to pay equity?
Achieving pay fairness is not a simple task. It requires a systematic approach that enables comparison of pay for comparable jobs and uncovers inequities in existing pay practices. The systematic approach helps determine a coherent structure. Coherence is a precondition for achieving fairness in compensation and benefit policies.
Coherence will also help in communicating your policies. Even if employees don’t know the salaries of all their colleagues, they will perceive your pay structure as fair or unfair based on the little information that they have. Every piece of information that supports the perception of a well-thought-out pay structure lowers perceived unfair treatment and avoids dissatisfaction. A coherent structure will provide you with the arguments that you can communicate.
How to get started?
The simplest way to create coherence is to create a job architecture. It organizes jobs based on their function within an organization. Its most important design principle is clear and consistent criteria for determining the value of each job in relation to the business strategy and – subsequently – the corresponding pay range
Five measures to increase pay fairness
Review and update job descriptions.
Job descriptions seem to be perceived as a drag by some but they are vital for pay equity issues. They exist to accurately reflect the duties, responsibilities, skills, and qualifications required for each job. If possible, also the desired outcomes. Even if in practice they might be neglected, they are the best foundation for comparability. They only need to be clear, concise, and consistent across the organization (and obviously without biased language that might deter or exclude certain groups of people). All of the job descriptions together form a job catalog as an important part of a job architecture.
Conduct a pay equity analysis.
This is a process of comparing the compensation of employees who perform similar work to identify disparities based on gender, race, or any other factors. A job architecture will tell you quickly which jobs you should compare (i.e. by similar roles or similar contributions). In case your job architecture was built with a visually compelling UX, you will even be able to visualize them side by side on your screen. The pay equity analysis reveals potential pay gaps or discrimination issues that need to be addressed.
Establish pay ranges.
In practice, few jobs are alike. But many jobs can be called similar. It’s therefore an established practice to define pay ranges, a minimum and maximum amount of pay that an employee can receive for a given job based on market data and internal equity. Pay ranges can easily be defined within a job architecture because you’ll know the relative value of each job within the organization. The pay ranges should also be communicated to employees and managers to enhance transparency and trust.
Monitor and adjust pay practices regularly.
The most efficient way to monitor pay practices is by reviewing and updating the job architecture periodically. This ensures that the pay structure remains relevant, accurate, and fair. It involves collecting and analyzing employee feedback, performance outcomes, and pay equity indicators. You might also want to include data on market trends or analyze how technological progress changes jobs. You can then easily make necessary adjustments to address changes or issues that might affect pay fairness.
Educate and empower employees and managers on pay equity issues.
Processes, data, and technology are helpful tools to create pay equity. But they will not suffice if it’s not a shared value of the workforce and not part of the company culture. Education and empowerment are key. Employees and managers should be aware of the importance and benefits of pay equity for themselves and the organization. They should also understand how pay decisions are made based on the job architecture and other factors. They should have access to relevant information and resources on pay equity issues, such as salary surveys, pay calculators, career development tools, etc. They should also have opportunities to voice their concerns or questions about their pay or career progression.
By following these five measures, you can leverage your job architecture to improve gender pay equity within your organization. You can also demonstrate your commitment to diversity, equity, and inclusion in your workplace. You can boost your employee engagement, satisfaction, retention, productivity, performance, innovation, reputation, and profitability.
And then, one day, we might not even discuss the issue anymore.