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January 30, 2023
The buzz surrounding pay equity is getting louder, and employers can no longer afford to sidestep the topic. Put simply, the concept of pay equity means that employees believe they are fairly compensated based on their performance, abilities and their job responsibilities.
Nationwide, more states and cities have moved to enact pay equity-related laws aimed at closing gender and racial pay gaps. Meanwhile, more employers are addressing pay equity issues.
According to a January 2023 survey by WorldatWork and Fidelity Investments, nearly 70% of 534 responding organizations reported taking action on pay equity in 2022 — up 4% from 2021 and 10% since 2019.
To recap, these studies suggest that pay equity offers employers an opportunity to foster motivation and innovation, drive employee engagement, minimize turnover, improve reputation and attract talent.
Employers who merely pay lip service to pay equity or consider it a one-off aren’t doing their business any favors. With pay equity increasingly dominating popular discourse, particularly in the era of the Great Resignation, opens employers to attrition woes and even potential legal action, imperiling growth and the bottom line.
But how do you go about building a fair-paying workplace? Below is a quick guide to help you fix pay inequality in your organization.
Organizations making pay equity a priority this year and going forward should start by identifying where they stand with regard to the topic, and what it will take to get to the next level.
To assist you in evaluating your business’s pay equity position, here is a framework that measures your current pay practices and helps establish goals for improvement.
Businesses in the beginner stage may have only a basic awareness of compensation equity. Such workplaces typically lack strong DE&I policies, have no concrete pay equity policies, have low or poor employee engagement levels and are not very inclusive.
Employers in this stage often face challenges in complying with local, state and federal equal pay-related requirements, when applicable, due to a lack of resources; or they simply don’t prioritize pay equity.
How to advance to the next stage:
Employers in the intermediate stage have fair-pay policies and practices on their books, appropriate pay measurement systems in place, and clearly documented job structures and pay philosophy as part of their operational playbook. As a result, they are compliant with the pay-equity laws of their respective state or city.
These organizations also continually communicate goals, progress and achievement toward pay-equity practices with stakeholders.
Employers who have reached the advanced stage have incorporated pay-equity goals and initiatives into their business philosophy and offer inclusive workplaces. To keep up with the ever-changing world of work, they continue working to promote pay equity and DE&I.
Such employers have reliable data and metrics available, routinely conduct pay-equity audits to evaluate their position and subsequently take action to correct the underlying causes of any disparities, if identified. Moreover, employers at this stage solicit feedback from employees and other relevant stakeholders, which they leverage to drive future pay-equity initiatives.
Wherever you stand in your pay equity journey, remember that achieving pay equity is an ongoing effort that requires a long-term commitment and assiduousness. Pursuing pay equity with the rigor of any other business function will ensure that it is properly measured and managed.
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