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Implement pay equity in your business with this guide

Posted by Kanika Sinha

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.

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Delve deeper


What is pay equity? Pay equity is the practice of compensating employees the same way for the same work, regardless of their race, gender, disability, LGBTQ or other status. In short, equal pay for equal work.

Why does it matter? Pay equity isn’t just the right thing to do; research also finds that prioritizing it is good for business, as illustrated below.

  • A 2021 study conducted by job recruiting site Indeed finds that 81% of employees are more productive and engaged when they perceive themselves as paid fairly. That same report suggests that 75% of job seekers are more likely to apply to an organization that has a reputation for paying fairly.
  •  A 2019 Glassdoor Economic Research Study finds that 58% of employees would decline to apply to companies where there is a pay gap. This percentage increases to 72% among female employees.
  • A study by Aptitude Research Partners finds that organizations that prioritize pay equity see 13% higher engagement levels; are 19% more likely to exceed industry average levels of productivity; and experience better-than-industry-average turnover benchmarks. Plus, fair-paying firms are 26% more likely to see an improvement in the quality of their new hires and 42% more likely to see an increase in their year-over-year rating on Glassdoor.
  • An HR Predictions for 2022 report by human resources research analyst and author Josh Bersin indicates equitable and fair pay as among the greatest drivers of employee satisfaction.

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.

How businesses can achieve pay equity

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.

Stage 1: Beginner

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. 

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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:

  • Establish an efficient measurement system for employee baseline pay.
  • Define your pay-equity goals and have a clear set of guidelines in place.
  • Regularly monitor your baseline pay to track progress towards those pay-equity goals.
  • Communicate your commitment and progress honestly to relevant stakeholders, to build trust within the entire organization.

Stage 2: Intermediate

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.

How to advance to the next stage:

  • Discreetly execute planned initiatives to address pay issues and eliminate pay disparities.
  • Validate data to ensure pay-equity practices are accurate.
  • Routinely act on pay equity and representation findings to achieve fair pay.
  • Identify factors contributing to the disparities identified and align existing initiatives to eliminate them.
  • Aim to achieve or surpass industry benchmarks with regard to pay equity or DE&I standards.
  • Link leadership bonus compensation to progress made toward achieving DE&I global standards.
  • Obtain certification from an independent third-party vendor demonstrating achievement and commitment to fair pay.

Stage 3: Advanced

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.

Want more? In addition to HR, benefits, recruiting and payroll through its PeopleOps, Escalon’s Essential Business Services include FinOps (CFO services, taxes, bookkeeping and accounting) and Risk (business insurance). Talk to an expert today.

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Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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