5 Key Findings of the Josh Bersin Definitive Guide to Pay Equity
The Josh Bersin Definitive Guide to Pay Equity, a global industry report commissioned by Salary.com, offers a detailed framework for pay equity, five key findings of their pay equity research, and a four-level maturity model. Quantitative and qualitative research has been conducted to create this guide.
In this article, we summarize the five key findings around pay equity excellence that are discussed in detail in the report.
Fair and equitable pay has a huge business impact, but 95% of companies struggle
The first finding of this global industry report involves rewards and benefits. Many employees may think that the way to boost employee experience is to offer above-average rewards and benefits. In fact, providing fair and equitable rewards is the key. This study found that pay equity was more impactful than compensation, benefits, health and well-being support, and flexibility, career, and purpose.
When breaking rewards down further, benefits associated with pay equity were most desirable. The following ranked “very high” in effectiveness and impact on business, people, and innovation outcomes.
- Career enhancement (Flexibility, career, and purpose)
- Pay equity approach (Pay Equity)
- Business ownership (Pay Equity
- Equitable talent processes (Pay Equity)
The take-home message, as explained in the report, is that “distributing your rewards dollars in a more equitable way is more important than lavishing rewards and growth.”
A major lack of funding and organizational action inhibits progress in pay equity
Of the surveyed 448 companies, Josh Bersin found that most companies fail to take action on pay equity. They appear to feel unsure about how to go about pay equity beyond their legal obligations. As a result, the potential for pay equity to improve business and innovation isn’t being recognized.
On a positive note, 71% of respondents said pay equity is a critical component of their business and people strategy. Additionally, 67% regard pay equity as much more than a legal and compliance issue. Unfortunately, only 11% said that they are transparent about their pay equity work and only 11% equip their managers to communicate pay equity adjustments. Budgets also seem to be lacking, with only 14% setting aside a significant budget to address pay equity issues.
As explained in the report, “Our research finds that transparent communication about the benefits of pay equity to the company, to leaders, and to employees is critical, yet as many as 9 in 10 companies fail to do so.”
Pay equity is a way to run your company, not a reward project
Pay equity is an ongoing process. However, 84% of companies surveyed for the report said they treat pay equity as a once-a-year project. Unsurprisingly, they run into the same issues with every analysis.
Without looking for root causes or addressing underlying issues on a continuous basis, it’s difficult to make changes around pay equity in your organization. Josh Bersin suggests three strategies based on their studies.
- Leverage skills and capability assessments by breaking down jobs into smaller components for pay equity analysis.
- Mitigate bias in all talent practices, including recruitment and mobility, career and development, and performance management.
- Listen to employees and address real or perceived pay equity issues (which is currently only done 21% of the time).
Sustainable pay equity progress relies on effective change management and transparent communication
Just 15% of companies effectively communicate and manage the significant changes related to pay equity. In fact, the study found that change and communication ranked lowest when scoring how effectively companies address certain elements. They better addressed philosophy and strategy, talent processes, jobs and skills, and analytics and technology, but only marginally.
The suggested practices required to improve these numbers include:
- Increasing leadership awareness – only 14% of companies empower leaders to understand and communicate pay equity as a business priority.
- Incorporating pay equity in management training – just 12% of companies equip managers to communicate individual pay adjustments.
- Communicating transparently internally and externally – only 11% of companies transparently communicate their pay equity work internally and externally.
A comprehensive, modern technology solution is indispensable to pay equity progress
Companies using specialized technology and analytics for pay equity are 3.2x more likely to engage and retain employees and 7x more likely to attract the right talent. The reality? 86% of employers don’t leverage such technology solutions. This can be a costly mistake. The risk of error when a company isn’t using technology within their pay equity analyses can involve compliance, legal, and reputational consequences.
“When we started doing pay equity work, we learned quickly that the job evaluation and skills assessment are the hardest part,” the vice president of a multisite retailer told Josh Bersin. The numbers speak for themselves, with 88% of high-performing organizations using outside technology. Just 5% of low-performing organizations have the same practice. Salary.com offers technology that can make internal equity calculations and external benchmarking whilst also triggering action items for managers.
In Conclusion
As we are understanding more and more, pay equity is vital to any successful organization. Unfortunately, it seems that many employers aren’t entirely sure how to address and properly integrate it. Funding, misinformation, and the wrong approach are restricting companies from experiencing the true benefits of pay equity.
Check Out ‘The Definitive Guide to Pay Equity’
The Definitive Guide to Pay Equity will equip you with all the knowledge you need to have a deep understanding of pay equity. Through what is outlined, you will be able to create a plan for achieving pay equity, identify what’s most important, assess your organization’s current pay equity situation, and define the actionable steps toward achieving excellence in pay equity.
Read more from this series:
- Definitive Guide to Pay Equity
- Pay Equity Framework
- Pay Equity Maturity Model
- 5 Key Findings of the Definitive Guide to Pay Equity
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