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Why pay equity is no longer good enough

Compensation Strategy & Design|Talent|Total Rewards
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By Lori Wisper | May 5, 2021

The bar has been raised on overall fairness to include not only pay equity but “career equity” as well.

Many of you may have recently been involved in a pay equity study in your organization. Many organizations worldwide, small and large, public and private (although, it’s likelier to be done in public companies), are conducting these studies.

A pay equity analysis seeks to examine whether organizations pay certain employees doing the same job fairly (i.e., equal pay for equal work). These analytics typically are conducted under the protection of client-attorney privilege and are a way to ensure compliance with a variety of laws and regulations. As such, many employees don’t even know when pay equity analyses are done unless the company chooses to disclose the results (a rare occurrence in the U.S.).

Employers that go through these analytical exercises often spend large sums of money for what they expect to be a one-time event to remediate unfair pay to individuals affected primarily by biases in pay decisions. However, when they continue conducting these assessments regularly, whether that’s annually or at longer intervals, they typically find that the same pattern of bias repeats itself.

Through these pay studies, there’s a tendency to think that we’ve solved pay equity issues, but if those issues keep coming back because organizations are ever changing, what are we really doing to solve them? In other words, why is the goal of paying all employees equitably no longer good enough for organizations to achieve?

Paying equitably is certainly a worthy goal for organizations; however, it’s no longer good enough if it is treated as a one-time action. Organizations must not only adjust the compensation of those who are victims of pay discrimination but also dig into the root causes of the issues to completely solve the problem. And here’s the real story: The root causes of pay discrimination have very little to do with pay and everything to do with all of today’s other HR processes and programs.

To fully solve their pay equity issues — and avoid seeing them resurface — organizations need to determine:

  • How starting salaries are determined
  • How performance ratings are determined and salary increases awarded
  • How employees progress in their careers through promotions and other movement
  • How learning and development opportunities impact career progression differently for different groups

This is no longer about pay equity alone, but more broadly about opportunity or career equity. With true career equity, men and women, people of color and other underrepresented groups would have the same opportunity for starting at similar points in their careers and be given similar opportunities for advancement. This isn’t just about examining representation of different classes of employees at different organization levels (although, that is part of it), but more about determining the drivers of career success and ensuring that all classes of employees have equitable access to those drivers.

A stark example of this arose during the 2021 U.S. men’s and women’s NCAA basketball tournaments. Both Division 1 tournaments were played at the same time, each hosting 64 teams in two different “bubbles” (deployed to ensure COVID-19 safety). Men were in Indiana and women in Texas.

On March 18, before the start of both tournaments, University of Oregon forward Sedona Prince posted a video of the women’s weight room, which consisted of a single set of weights. The video went on to show the men’s weight room, which displayed rows and rows of weights and training equipment. Stanford University sports performance coach Ali Kershner tweeted, “This needs to be addressed. These women want and deserve to be given the same opportunities.”

This wasn’t about gender bias in pay (although, that also is an issue in professional sports); rather, it was about providing the women’s teams with the same tools and resources to give them the same opportunity for success as the men’s teams.

Going back to employers, let’s note that giving all employees an equal opportunity to succeed should happen at all levels. Boards of directors and executives like to point to women and people of color that have “broken the glass ceiling” and show up in C-suites or other high-level positions, but what about at the supervisory level? What about first levels of management or higher-level professional jobs? Employees experience real change at the grassroots level, not simply when a woman or person of color is promoted to the officer ranks. This will only happen when there is career equity across an organization.

So while I’m certain many of you have conducted pay equity studies in the past year or two, what have you done to ensure that all employees are getting equitable career opportunities so that you can have true pay fairness in the longer term? What does your (metaphorical) weight room look like for underrepresented groups?

Author

Managing Director, Chicago Office Line of Business Leader, Rewards

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