Preparing for Pay Equity: The Workforce Institute Weigh-In for March 2022

This month, The Workforce Institute Weigh-In addresses the critical topic of pay equity and, more specifically, working to “close the gap.”

The Workforce Institute Weigh-In for March 2022: “What do organizations need to prepare for as they actively move to tackle the pay-equity challenge?”

“Well-run organizations need to be prepared for the fact that there is probably not gender pay gaps. Organizations with effective compensation teams have spent decades addressing unfairness in gender pay. Hopefully, by now, they will have fixed those problems. This creates its own challenge because the PR message you want to give is, ‘We found an inequity and fixed it,’ and not, ‘We have managed comp in a professional way so that there were no inequities.’” — David Creelman, chief executive officer, Creelman Research

“The principles of compensation and total rewards can be tricky, so organizations need to partner with experts in this field. It’s easy to ‘fix’ one aspect of total rewards and unknowingly create another problem at the same time. If your organization doesn’t have a compensation expert on staff (and many don’t), reach out to your local SHRM or WorldAtWork chapters to find one.” — Sharlyn Lauby, author, HR Bartender blog

“Tackling pay equity is actually a great opportunity to partner human and machine talent in a technology-driven, ‘human in the loop’ process. It’s well-known that AI (artificial intelligence) algorithms can assist in setting pay in a way that eliminates subjectivity and removes bias. However, given how closely managerial input on performance reviews (for instance) is tied to pay, we cannot remove people from the equation and are more likely to achieve greater pay equity if we leverage both resources.” — Alexandra Levit, author, Humanity Works

“Tackling this challenge requires a multistep strategy. In addition to addressing systemic cultural issues, here is what one might need in order to prepare for this journey: 1) Ensure a genuine buy-in from the C-suite to address this challenge. 2) Obtain the organizational data that identifies and validates specific positions and people where the gap exists. 3) Create a financial model for the best-case scenario, where addressing 100% of the gaps is the stated goal. 4) Develop a priority listing and timeline to apply the fixes. This timeline might span more than one budget cycle, depending on the funds needed to apply the fixes and available resources. 5) Examine and revise structural components of pay policies to mitigate creating future gaps, and include budgetary components. Finally, check your work, and validate that the fixes you applied and that the modified structural components actually addressed the current pay-equity issues and will help avoid future issues.” — Dennis Miller, assistant vice president of HR and benefits administration, The Claremont Colleges

“Organizations must be prepared to spend a considerable amount of money initially and every 3-5 years to address issues of pay equity. The initial review of pay for equity will reveal inequities to correct, and the natural course of hiring, terminations, and other employment changes will create gaps every few years that will have to be addressed. Correcting pay equity costs money. There’s no other way out.” — Sarah Morgan, chief excellence officer, BuzzARooney, LLC

“Organizations will be faced with the critical challenge of right-sizing pay, not only within their organization but against competition. With more and more states pushing for pay transparency, employees will not simply ask, ‘What does my coworker make?’ They’ll be asking, ‘Why don’t we pay as well as [insert competitor]?’ Be ready to tackle pay equity with agility, candor, and an honest look at your organization and where it falls in the greater competitive landscape.” — Joey V. Price, co-host, While We Were Working podcast

“You can’t tackle the pay-equity challenge unless you are willing to do both a data and a behavioral audit to understand behaviors, policies, and practices that define your organization up to this point. The data audit is the easy part. The easy part is to look at the numbers and see where gaps occur. The harder challenge is to look backward, understand how you got there, and create a plan of action moving forward to prevent and address future inequities in your company.” — Laurie Ruettimann, host, Punk Rock HR podcast

“When working to correct the salary gap, be sure to watch out for pitfalls, especially from an HR or legal perspective. It is important to calculate the gap first, and then figure out how to fix it without ballooning your wage bill, while maintaining the incentive structure and avoiding the creation of new legal liabilities.” — Ivonne Vargas, author, ¡Contrátame! (Hire Me!)