4 Actionable Strategies for Achieving Pay Equity
March 14, 2023, is Women’s Equal Pay Day — a symbolic day representing how far into the next year white women need to work in order to earn the same amount that white men earned the previous year. The current state of the (uncontrolled) gender pay gap is 83 cents on the dollar, a figure that has slowly climbed over recent years but is projected to take decades to close fully.
For women of color and other historically marginalized groups, we still have months to go.
- Asian American, Native Hawaiian and Pacific Islander Equal Pay Day is May 3
- LGBTQIA+ Equal Pay Awareness Day is June 15
- Moms’ Equal Pay Day is September 8
- Black Women’s Equal Pay Day is September 21
- Latina’s Equal Pay Day is October 5
Pay equity has become a hot topic for HR professionals amid increased pressure for transparent compensation practices. Technically, pay discrimination has been illegal for more than 60 years, but differences in education, experience level, skillset, and more made it challenging to recognize discrimination, much less prove it. Workplace policies (both formal and unwritten) strongly discouraged pay discussions among colleagues, making it extremely challenging for employees to know whether they were being paid less than their peers.
But all that is changing. In addition to the widespread publicity of “holidays” like Equal Pay Day, legislation and social norms are driving massive changes. As of January 1, 2023, seven states and six U.S. cities or counties have passed pay transparency legislation, bringing widespread visibility to pay ranges for perhaps the first time. The fact that these changes occurred as many companies transitioned to hybrid or remote working models means a significant number of employers have been impacted. Additionally, research shows that younger generations are much more likely to share salary information with coworkers or other professional contacts; a 2022 study found that 42% of Gen Z and 40% of Millennials had done so, compared to just 19% of Baby Boomers and 31% of Gen Xers.
Meanwhile, just 32 percent of workers think they’re paid fairly — and low or inequitable pay was cited as a primary reason employees left organizations during the Great Resignation. Clearly, in addition to the obvious ethical and social justice reasons to prioritize equal pay for equal work, pay equity has become a business imperative.
Four Actionable Strategies for Achieving Pay Equity
Challenges in achieving pay equity
Despite the clear benefits (and legal requirement), achieving pay equity can be challenging. One of the major obstacles is that many organizations lack transparency around their own compensation practices. Mountains of research conclude unconscious biases often impact hiring, compensation, performance and promotion decisions, perpetuating gender and racial pay gaps. A lack of clear pay bands can lead to massive discrepancies within roles. And when employees lack visibility into how their pay is determined, the result is often feelings of unfairness and mistrust. In addition, some organizations may not have clear job descriptions or performance metrics, making it difficult to compare salaries across different roles.
Strategies for achieving pay equity
Despite these challenges, there are many strategies HR professionals can use to promote pay equity within their organizations. Here are four proven approaches that address pay equity holistically (and be sure to check out my post about supporting working caregivers).
1. Conduct a Pay Equity Audit
Conducting a comprehensive audit of your organization’s compensation practices involves reviewing job descriptions, performance metrics, and salary data to identify any disparities based on gender, race, ethnicity, or other characteristics. This information can also be used to address inequities as they’re uncovered.
A great way to do this is to use an HR tech solution that offers compensation benchmarking. This will enable your organization to see where your compensation for specific positions compares to similar organizations that are in the same region, industry, and company size.
The perfect time to do these audits is around performance reviews. Creating a uniformed performance review process allows your organization to seamlessly complete compensation evaluations, review performance, and make adjustments as needed all at one time.
2. Develop clear compensation policies
To ensure transparency and fairness in compensation, organizations should define clear policies that determine how pay decisions are made. This includes having clear job descriptions and performance metrics, as well as guidelines for determining salaries and benefits and established pay bands. Clear guidelines and policies can prevent unconscious biases from influencing compensation decisions.
These policies also need to begin prior to hiring. During the recruitment process, HR tech solutions that house recruitment information during every step of the process and offer suggestions based on the information can help your people avoid unconscious bias. This ensures new hires start off on the right track and sets them up for success as they continue to grow within your organization.
3. Provide training on unconscious bias
HR professionals must continue providing training to managers and other decision-makers on how to recognize and mitigate bias. Be sure to include areas that aren’t often focused on, such as not penalizing candidates (typically female candidates) for short resume gaps related to childcare or caregiving. HR tech that offers training and learning capabilities can be used to create personalized courses for your organization related to this topic. Since it lives in the same place as your other training courses, your people will be able to access everything in one place.
4. Regularly review and update compensation practices
Pay equity management is not a one-time event – it requires ongoing attention. A perfect example of this is the large salary offers we witnessed in many industries during the Great Resignation, as inflation soared and companies struggled to attract and retain their people. Due to heightened demand, many teams saw new hires earning much higher salaries than employees in the same role who had been with the company for years.
This is a timely example of why HR professionals need to regularly review salary data, even after a comprehensive audit has been done. Robust reporting capabilities offered within HR tech solutions make it easy for organizations to complete regular audits of their compensation. These types of audits not only ensure pay equity, but also expand to ensure that you’re staying competitive in the industry, leading to higher retention rates.
The UKG commitment to pay equity
As a concept, pay equity is fairly straightforward, but achieving true equity is a complex and challenging process. But UKG is committed to doing our part to close the wage gap. We pledge to continue to invest in education, training, and the technology and tools we use to ensure equity for our own people. And we pledge to help our customers do the same by investing in the technology and tools that support their own equitable pay practices.
Learn more about how UKG can help you not only manage everything from HR and payroll to talent and time, but also help ensure pay equity and fairness across your organization.
Leverage the resources on the UKG Pay Equity Resources page to learn more about what you can do to help balance the pay scales, not just for women but for all people fighting for change to achieve pay equity.
The UKG Ready Compensation profile shows how you’ll be able to streamline compensation planning.