What the heck is pay equity, and why should you care? 34% of employees believe their pay is pair. Furthermore, only 34% of employees believe their pay is equitable (Gartner, 2022) (https://www.gartner.com/en/newsroom/11-28-22-gartner-hr-research-finds-only-thirty-two-percent-of-employees-believe-their-pay-is-fair). Pay equity is a complex, sensitive and daunting issue for many organizations (Truisaic, 2021).
Global HR analyst Josh Bersin states, “In a time of high inflation and unprecedented levels of pay transparency laws, it is not just the level of pay that matters to workers, but the perceived fairness of pay.” You ask why this has become such a big deal – Pay Transparency Laws and DEI. Furthermore, studies show that fair pay is tied to employee wellness (Bersin, 2023).
Economic conditions and the hot job market have caused a shift in compensation between tenured employees and new hires (Guadagni, 2022). Therefore, pay disparities should be addressed by conducting pay audits and addressing remuneration. In addition, organizations should set clear job descriptions and pay scales and train managers and employees on pay equity principles.
Pay equity ensures that people are paid fairly for their work regardless of gender, race, ethnicity, or other protected characteristics. Employees who perform the same or similar work should receive equal pay. Moreover, pay equity means employees who perform the same job and have the level of experience and qualifications should receive the same pay. The caveat is that they contribute equally to the organization’s success (performance). Pay equity is significant because it helps reduce workplace discrimination and potential lawsuits.
Pay equity is essential for several reasons:
- Retention and motivation – employees prefer to leave for better-paying jobs when they do not feel paid fairly. Therefore, pay equity is critical if companies want a stable and engaged workplace.
- Legal compliance – countries and states have passed laws requiring companies’ pay equity and transparency. Moreover, the new EEO-1 form requires compensation data. These laws require that organizations comply with laws, can avoid legal risks, and demonstrate commitment to fairness and equality.
- Economic benefits – when employees feel fairly paid, they are more like to spend their money in the local economy. This strengthens economic growth and benefits organizations and communities.
- Fair and Equity – pay equity promotes a more just and inclusive work environment where employees feel valued and respected.
Pay equity is an essential principle that companies should pay attention to because it can create a thriving and equitable workplace. Furthermore, some states require this analysis, so ensure you are prepared!
Please get in touch with our office if you have questions about pay transparency or equity.
References:
Bersin, Josh (2023). Pay Equity. https://synd.io/josh-bersin-on-pay-equity/
Truistic, (2021). Designing a successful pay equity policy for your organization.
