6 Steps to Address Pay Equity

Smart organizations address pay equity. This is an important issue in the workforce today. Your organization needs policies around pay equity to strengthen company branding, expand your talent pool and attract top talent, as well as avoid potential litigation. As a result, you can confidently grow with a positive reputation and dedicated employees.

Addressing pay equity can seem like a daunting task. Let’s face it, it’s not easy compiling your data, analyzing the results, addressing any existing issues, and enforcing changes. To help you, Salary.com’s senior leaders Carol Ferrari, Chris Fusco, and CEO Kent Plunkett have created the six-step Plunkett Pay Equity Framework.

We also offer CompAnalyst, a compensation management software that allows you to access our worldwide database to manage your data, build job descriptions, and compare internal vs. external market practices.

Let’s take a look at how to utilize the framework in your compensation management, and how CompAnalyst could help you achieve this.

What is Pay Equity?

Pay equity can be defined as equal pay for comparable jobs that is internally equitable, externally competitive, and transparently communicated. You need to outline what this means for your organization as it’s different for everyone.

Why Does Pay Equity Matter?

Addressing pay equity sets the tone for a positive work environment. More and more employees want to know that they’re being paid fairly. If nothing else, it helps you avoid potential discrimination lawsuits.

“Everyone wants to work for an organization that they are confident is paying fairly,” said Ferrari, vice president of product marketing at Salary.com.

The take-home reasons why you should care about pay equity are:

1. Employees are demanding it
2. There is federal and state pay equity legislation
3. It’s the right thing to do

Plunkett Pay Equity Framework

The Plunkett Pay Equity Framework is a prescriptive approach to helping you achieve pay equity. It simplifies the process of establishing pay equity which is something that can often seem overwhelming and difficult. Let’s dive deeper into what each step entails and why you should consider using CompAnalyst to help the process.

Step 1. Mandate Pay Equity

Key Messages:

• Obtain leadership buy-in
• Establish a pay equity philosophy
• Get the right resources

You can’t achieve pay equity unless you make it a philosophy. This requires communication with your leadership team and support from your stakeholders. You must outline your commitment and be transparent with employees. None of this is achievable without a budget and the right people.

WATCH: Mandate Pay Equity webinar

Step 2. Group Comparable Jobs

Key Messages:

1. Collect the data
2. Analyze and document jobs
3. Build job structures

First, you need to collect your data. This should be information on gender, age, ethnicity (people data) as well as skills, duties, and experience (job data). How are they compared? What’s making these jobs relevant and similar? Look at this data from a compensation standpoint. Using CompAnalyst, you can input the variables you see fit. You want to choose those that could influence the compensation your employees receive.

Then, you need to evaluate the jobs, determine their relative worth, and group them. CompAnalyst offers a product called Job Architect which lets you build your job descriptions and create a library.

Finally, you can identify similar jobs and group them to produce a hierarchy. Using this information, you’ll create criteria that allow you to make meaningful compensation decisions. CompAnalyst will compare and evaluate them to determine their relative worth and then group them for you. Learn more about grouping comparable jobs here.

WATCH: Group Comparable Jobs webinar

Step 3. Model Internal Equity

Key Messages:

1. Assess pay gaps
2. Run multivariate regression analyses
3. Conduct cohort analysis
4. Model and remediate

The next step is to evaluate the demographics and pay levels across your organization. Use this analysis to determine systemic or structural issues that could continue over time. The multivariate regression analyses will create a model that shows whether you have pay gaps that appear to be influenced by any one set of factors.

CompAnalyst can do this analysis for you which will make it much easiest to digest. You can review the data at face value, or in further detail to understand things deeper and with visuals.

If you establish potential pay equity issues, you then conduct a cohort analysis. CompAnalyst presents information on the external market, internal job range, where the person sits in salary today, and predictions. This information offers an explanation for your findings. You can then model adjustments to find the right solution.

It’s important to get legal counsel involved at this stage so they can review your recommendations. CompAnalyst has tools to make this interaction easier and encourage attorney-client privilege.

WATCH: Model Internal Equity webinar

Step 4. Benchmark External Equity

Key Messages:

1. Market pricing best practices (multiple sources, bulk matching, slotting, salary structures)
2. Analyze potential compression issues

You need internal and external data to do your market pricing. This involves comparing your organization’s compensation to compensation in the market for the same jobs. CompAnalyst’s database will be able to conduct robust market pricing comparisons. It can then offer data solutions and demonstrate what you need to do to remain competitive and fair.

Once you have the data, CompAnalyst is a one-stop shop. It will provide information on HRIS Integration, smart matching and bulk pricing, survey management, salary structures and job ranges, and reporting and analytics.

WATCH: Benchmark External Competitiveness webinar

Step 5. Communicate Transparently

Key Messages:

1. Design a communication plan
2. Measure success
3. Monitor employee engagement

Addressing pay equity involves having a philosophy that explains your organization’s compensation and why it is that way. This means that decisions can remain consistent, and your employees feel involved. CompAnalyst produces presentation-ready reports to have these conversations with employees.

Measure the success of your equity strategy by observing turnover, retention, recruiting, and productivity rates. Ask your employees if they believe they’re being paid fairly. Communication about compensation should be open and welcomed. You’ll need to train your managers to have these discussions.

WATCH: Transparently Communicate Your Pay Equity Analysis webinar

Step 6. Update Continuously

The reality is you need to assess your organization’s compensation trends regularly. A tool like CompAnalyst can help you do this. You should be updating the data in your system every time someone gets a promotion, or you hire a new employee. The quality of the reports depends on how often you update the data. You need to apply a continuous, circular approach to pay equity.

WATCH: Update Continuously webinar

More Information on Pay Equity

Once you’ve established pay equity within your organization, you’ll have to repeatedly return to it. Salary.com offers an all-in-one compensation platform to make this a simpler and more thorough process for you.

For a more detailed explanation and visual examples of CompAnalyst, tune in to our recent webinar with Carol Ferrari and Ellie Maizels - How Smart Organizations are Addressing Pay Equity.