Ensuring all employees are paid fairly starts with reducing salary disparities based on race, gender, sexuality, and other factors; a challenge that continues across the business world. For example, the gender pay gap – the most commonly discussed form of pay inequity – is 14.9 percent in favour of men in the UK, according to the Office for National Statistics. A March 2023 Pew Research Center analysis of the median hourly earnings of both full- and part-time workers in the US found that the gender pay gap had ‘remained relatively stable’ over the past 20 years. In 2022, women earned an average of 82 percent of what men earned.
The business case
Even if we put aside the moral case for pay equity, its necessity is still plain to see. Companies who strive for pay equity stand to profit in terms of pounds and pence, on account of strengthening their reputation: 67 percent of job seekers consider workforce diversity when evaluating an offer, and 58 percent would consider changing jobs for more transparency. (For Gen Z employees, that number leaps to 70 percent.)
Productivity, innovation and retention also increase: employees who work in a fair environment have a 26 percent higher performance and a 27 percent lower chance of quitting. And companies that have conducted a pay equity analysis report almost 8 percent higher mean five-year Return-on-Equity.
Low-tech can be high-impact
A positive first step is to record all employee pay data in a confidential (preferably encrypted) spreadsheet that can display large amounts of information at once, and carry the potential for detailed analysis by trained professionals.
Make data beautiful
One drawback of spreadsheets is that even in the hands of skilled professionals they do not paint a picture of an organisation’s remuneration situation that is visually striking and thus allows for a more intuitive understanding of where interventions are needed. Happily, more advanced HR tools such as PayAnalytics or Assemble exist, and these kinds of tools display data in a colourful and user-friendly format, taking much of the more menial work out of human hands so those humans can focus on what humans do best – using their empathy, creativity and judgement to make the changes that their digital analysis implies.
Survey the scene
Pay within one company does not exist in isolation from pay within others. Of course the highest-performing and most profitable companies may pay their employees more than companies that are less profitable, but pay will be roughly similar for roughly similar companies. HR professionals and those responsible for driving pay equity can therefore benefit from understanding what pay looks like elsewhere, using salary surveys and research sites such as Glassdoor, SalaryExpert, Salary.com, Indeed, and the Bureau of Labor Statistics. Outside data, gathered through salary surveys, will, for instance, show the average salary for a certain role at a certain level in a company of a certain size. This can help you to understand what an employee in your own company can expect to be paid. Pay equity overlaps heavily here with retention: if employees can be paid more for the same work elsewhere, they may start to consider their options.
Bring it together with AI
Even with the benefit of a clear picture of pay across their organisations, historically, C-suite individuals and HR professionals have found defining fair pay difficult, and unconscious bias always threatens to creep in. In some organisations, individuals from historically underrepresented groups disproportionately work in certain roles or departments, and this can make them vulnerable to pay disparity. (This is one reason why women have been disproportionately laid off by tech companies.) Machine-learning and AI, though not altogether free of bias, can help organisations to crunch data and define the right pay package. A 2021 study used neural network models to help employees do just this. It is no surprise that, according to a Monica Motivates survey, just 11 percent of HR professionals perceived AI as a ‘threat’, suggesting most were optimistic about its potential to support their work.
Respect your context
Companies like Buffer have made the headlines for making pay and other financial metrics transparent. It is in part thanks to this that Buffer has been able to get their pay gap down to 0.4 percent – far lower than the 12 percent average for tech on the whole. But for bigger, older companies, reaching pay equity and transparency is not as simple as publishing everything right away, which could have a harmful effect by highlighting disparities that have grown, unnoticed, over time. These bigger companies will have work to do untangling the causes of their disparities and making changes; financial realities, contractual obligations and myriad other factors will prevent them from simply changing salaries. So businesses must respect their unique context, interrogate their values, mission and vision, and set a direction of travel which, with ongoing time and effort, will make pay equity a reality.
Final thoughts
Technology is not the be-all and end-all of pay equity. Nor is pay equity the only means by which companies should look to boost fairness. Pay equity should be one part of a comprehensive, ongoing, and data-driven DEI strategy that uses a variety of tools, techniques and approaches to drive continual cultural evolution – something 98 percent of HR professionals agree is important to business strategy, according to our survey. Pay equity is an essential part of developing a workplace that works for everyone.
