Written by Heather Bussing
May 29, 2022
Doing a pay equity analysis is not just about equal pay, it's also about equal work.
Since no two jobs are exactly alike, even at the same organization, no jobs are ever equal in practice. So, we do the best we can when comparing things that are hard to compare. We break each thing down into component parts or attributes. Then we compare those factors to see where things are alike and different.
If we wanted to compare desserts, we could look at calories, weight, volume, and the breakdown of fat, carbs, and protein.
But none of that really matters when you are choosing between apple pie and chocolate chip cookies. You already know what you're going to choose because of your experience tasting them and your preferences about pie, apples, cookies, and chocolate.
This is why it’s essential to keep the problem you're trying to solve in front of you while you select the attributes to compare. It's tempting to choose attributes you can measure easily or use some data that you already have. It's harder to make sure what you are comparing will give you useful information for what you want to know or do.
In looking at pay equity, we compare jobs so we can compare pay for those jobs. When there are disparities in pay between similar jobs (and there usually are), then we compare the people doing those jobs to understand their differences. If one person is making more because they have more experience, special training, or other factors, then the pay difference may be justified.
Pay equity laws require us to compare jobs by comparing level of skills, responsibility and effort. Sometimes additional criteria like working conditions and exposure to hazards are included. It's cleverly called "comparable work," except when it's called "substantially similar work." It depends on the state or federal law on pay equity, but comparable work and substantially similar work mean the same thing.
To do a pay equity analysis, you will need job data, pay data, and people data.
Useful data about your organization's jobs requires more than simply matching job titles or making assumptions about skills and effort based on where the role fits in the org chart.
Start with job descriptions that have information on:
If your job descriptions need work, you are not alone. It's common for organizations to look at their job descriptions and realize they were created for recruiting or workers' compensation. There are great tools that can help you create and maintain job descriptions that you can use for pay equity and everything else.
Compensation data should include:
Then you need your people data, which should include:
Once you have the data you need and it's complete and accurate, you can start the job evaluation process to determine the relative worth of the jobs and create an internally aligned job structure.
Compare jobs according to their relative skill, effort, and responsibilities and group the ones that are similar.
Then look at how the work adds value and helps the organization achieve its goals.
This process should result in a job worth hierarchy that ranks jobs based on skills, duties, responsibilities, and value to the organization.
When deciding on how many levels to define, make sure you don't get so specific that multiple levels end up with only one or two jobs. You also don't want to be so general that when you look at pay ranges in that group, the range is so wide, it's almost meaningless.
What you want is a structure that has clear criteria and enough detail to make meaningful decisions about compensation for your organization.
This step involves the most work, but it's also the foundation for everything that follows.
It's worth taking the time, validating the data, and making thoughtful and informed decisions on what makes jobs the same or different. It will set you up to make the next step, Model Internal Equity, which is your first look at pay equity in your organization.
Download the Plunkett Pay Equity Framework to learn more.
Download our white paper to further understand how organizations across the country are using market data, internal analytics, and strategic communication to establish an equitable pay structure.