Bersin pay equity maturity model: level 2 – sporadic pay equity audit

Josh Bersin’s Definitive Guide to Pay Equity, commissioned by Salary.com, acts as a guide for companies aiming to excel in pay equity. Within the guide, there is a maturity model with four levels. Studies conducted to create this report found an alarming number of companies in the lowest two levels.

In our previous article The Pay Equity Maturity Model: Level 1 – Compliance-Driven Process, we discussed the characteristics of level one and how to transition into the second level of the maturity model. This article is for those companies at level two wanting to mature to level three. The report found that 37% of companies are at this stage.

What is Level 2 - Sporadic Pay Equity Audit?

If you’re at level two of the maturity model, you’ve gone beyond simply determining the pay gaps and now perform pay equity audits. Overall business results should improve. A compensation team that has little business involvement likely manages the pay equity process in such organizations. Here are some more characteristics of level two:

• Demographic targets limited to gender and ethnicity.
• Fail to address sexual orientation, age, and socioeconomic background.
• Some use of outside consulting for statistical analysis.
• No clear root causes.
• Repeated mitigations needed for every audit.
• Small assigned budget.
• Limited communication and transparency.

Why It’s Important to Move Past Level 2

While level two is a step up from level one, there is room for improvement. One of the major issues that remains is the absence of root causes. Pay audits are a great start, but progress is short-lived without a clear understanding of the issue. This means that any mitigation taking place falls short of making real pay equity progress. Rather than turning to the future, these organizations still focus on yesterday’s problems.

Another problem with companies at this level is that they limit pay transparency to legal requirements. This means that employees aren’t aware of either the identified pay gaps or the steps being taken to mitigate them. Without maturing to the next step, employers at this stage miss out on the opportunity to use pay equity to boost employee engagement and improve retention rates.

How to Transition to Level 3 in the Maturity Model

Maturing to level three is a task worth tackling. To do so, companies should focus on a broader strategy, mission, and purpose. Pay equity isn’t something you can address once and forget. It also isn’t enough to tick it off in your annual review. If a company wants to excel to level three, they’ll need to look at the bigger picture of how pay equity fits into their company.

There also needs to be more emphasis on transparency and communication. Don’t limit pay equity discussions to legal counsel or the finance department. It’s something that concerns employees, managers, HR, finance, executives, and stakeholders. By defining how pay equity contributes to the success of the business, everyone gets on the same page about why it’s a priority.

A company can also identify a C-suite leader to actively sponsor the work. They should support the journey and remove financial, cultural, and adoption barriers. Furthermore, when conducting audits, factors such as performance levels, skills proficiency, and criticality of skills need to be considered.

Final Considerations

By now, if you’re at level two of the maturity model, you probably understand that pay equity takes a lot of work. Audits and traditional approaches to issues are a good start, but you may not be seeing the progress you want. You’re also missing out on a lot of the benefits that come with levels three and four.

When you advance to level three, you’ll start to see more people outcomes. Engagement and retention will improve significantly. Josh Bersin explains, “While only 45% of Level 2 companies are able to retain and engage their workforce, this percentage jumps to 75% among Level 3 companies.” If your company reaches level three, find out how to excel to level four in our article The Pay Equity Maturity Model: Level 3 – Skills & Capability-Based Pay.