12 Essential Practices of Pay Equity

The concept of pay equity has been in the national conversation for over half a century. Recently, however, pay equity has come to the forefront of many organizations’ compensation strategies. This is due to employees, employers, federal, and local governments increasingly advocating for equal pay for equal work, no matter what a person’s personal attributes are.

Here at Salary.com, we have collaborated with The Josh Bersin Company to produce The Definitive Guide to Pay Equity. In this article, we will dive into which pay equity elements matter the most. After this, we will run through what the 12 essential practices of pay equity are.

An Introduction to the Definitive Guide to Pay Equity

The pay equity study in this report surveyed 448 companies and their 24 management and HR practices. 71% of CEOs see pay equity as a critical component of the people and business strategy in their organization, but only 14% dedicate a sufficient budget to address issues with pay equity. This outlines how plenty of organizations value pay equity but aren’t making sufficient strides to make it a reality in their organization.

In the report, there will be a focus on topics such as the pay equity framework, the five key findings regarding the survey, and the pay equity maturity model. When we think seriously about pay equity, there are many other things to consider. Let’s start by looking at the pay equity elements that matter the most.

The Pay Equity Elements That Matter the Most

When looking at which pay equity elements matter the most, it’s important to consider the question: what matters most when it comes to effective pay equity? In the report, we broke down the elements of pay equity to be analyzed into three components. These components are:

1. Business Outcomes

Exceptional financial performance and high levels of customer satisfaction.

2. People Outcomes

Attracting the right talent effectively, engaging employees, creating a sense of belonging, and that the organization is a great place to work.

3. Innovation Outcomes

Superior change adaptability and innovation that is effective.

The effectiveness and impact of these components were compared to each other in the study. Below you can see what this looks like in terms of organizational outcomes. The darker the color, the higher the effectiveness and impact of an element.

As you can see, each element yielded different results. For example, although 25% of companies are effective in setting a solid Philosophy and Strategy, this element only has a moderate impact on outcomes. On the other hand, only 15% of companies are effective in Change and Communication for pay equity, yet this element has a very high impact. These results can go a long way, including helping outline what the 12 essential practices of pay equity are.

The 12 Essential Practices of Pay Equity

The 12 essential practices of pay equity identified in the report are the ones that have the highest impact on organizational outcomes. Focusing on traditional pay equity strategies alone won’t be as effective nowadays. Instead, your organization should consider these areas as key to success:

• Business ownership of pay equity.
• A strategic, long-term approach going beyond legal risk mitigation.
• Transparent communication.

The 12 essential practices of pay equity include four of the five elements mentioned in the previous section. The element missing is Analytics and Technology, but this doesn’t mean it’s not important – it indicates it is a ‘hygiene factor’ rather than an impact driver. Without further ado, here are the 12 essential practices of pay equity.

As you can see, the practices at the top of the list have the highest relative impact. Take some time to read through each of these 12 essential practices of pay equity and see which ones your organization currently practices. After this, ask yourself the question: which pay equity practices would be the most useful for your organization?

Of course, these practices are all relative. They will benefit organizations’ pay equity practices and organizational outcomes on different scales. Despite this, it is important to take them all into consideration when moving forward and deciding on what your pay equity strategy will be.

Conclusion

The 12 essential practices of pay equity are part of the overall pay equity framework which helps your organization take the right steps regarding pay equity. Using survey data and information, the report provides you with up-to-date and valuable data in a variety of areas linked to pay equity. For further information and insights about pay equity, check out The Definitive Guide to Pay Equity here.