The Truth About Pay Equity
The Current Focus on Pay Equity
Many organizations are focusing on pay equity, Some are signing equal pay pledges and others are transparently sharing their processes and results for the world to see. While these efforts are both laudable and critically important, we offer a word of caution:
If your company is serious about addressing pay inequities, do not simply focus on compensation because pay inequity is not just about compensation.
And do not stop at a pay analysis and salary adjustments–because your pay disparities will surely return in the future.
That’s because pay inequity isn’t the actual problem. It’s merely a symptom of a broader, more systemic concern. If you only address the current salary issue, the real root causes will continue to manifest in your organization. In other words, pay audits and adjustments are simply band-aids (albeit necessary and important ones). To truly reconcile inequities in pay, we must address the root causes, which will stop the bleeding and solve the underlying problems.
The Long-Standing Issue of Pay Equity
According to the World Economic Forum, it will take more than 250 years to close the (uncontrolled) pay gap between men and women globally, when the aggregated salaries of all men are compared to those of all women. While the pay equity gap, which controls for compensable factors such as job level or experience, is smaller, the disparity between men and women still exists and needs to be addressed.
Additionally, it’s necessary to recognize that gender isn’t the only type of pay disparity. Pay inequities are compounded by race, with Black, Native American, Hispanic (or Latino/a/e), and Pacific Islander men and women earning even less than their White* counterparts. Biases, policies, and/or practices related to parental status, ability, age, work history, and body type can also impact compensation.
Most organizations do want to pay fairly. It’s a business imperative, is critical for legal compliance, and is necessary to create an inclusive workplace and be an employer of choice. Beyond the legal ramifications of pay discrimination, pay equity issues also make it more difficult to recruit and retain employees. Consumers are increasingly making buying decisions based on whether companies’ actions are aligned with their values, and organizations with pay equity problems can lose valued customers.
If everyone understands that pay equity is critical, why is it so hard to attain?
Closing the Pay Gap
Pay inequity is actually a lagging indicator of many issues that span the entire employee experience.
For example, let’s focus on one female manager in an organization. Despite having similar responsibilities, experience, and performance, a female manager may not earn as much as her male counterpart. Providing a salary increase, is only one step in remediation. Without addressing other causes of the pay disparity, there is risk that her pay could fall behind in the future and it won’t address whatever contributed to the initial inequity or prevent the next female manager from experiencing the same gap.
Instead, managers must take a more in-depth look at organization’s entire talent management systems, including recruiting, hiring, development, promotion, and retention practices. Was she given equal opportunities for developmental projects, mentoring, actionable coaching and feedback, and advancement as male counterparts? It’s not only a matter of equity in pay but equity in opportunity.
While a large focus of this example is centered on gender, talent practices that result in pay inequities must be viewed through additional and intersecting lenses to gender, such as race/ethnicity, age, representation at senior management levels and other identifiers, to holistically make progress toward pay equity.
In short, there may be many organizational practices that are inadvertently causing or exacerbating pay disparities in your organization. All of these must be examined and addressed with training to solve–and prevent–pay disparities.