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Pay Equity Best Practices


The issue of pay equity has nearly become a movement, such is its sweep over the country. Make no mistake: it is going to visit your organization -- if it hasn’t already. So why not get ahead of the situation? Here are some pay equity best practices.


The Issue

Women earn 78 cents for every dollar earned by a male. What’s more, women, as well as people of color, are less likely than men to hold high-level, high-paying jobs. The good news is that there are steps your company can take to narrow, if not close, the wage gap.


Clean Up Your Hiring

For one, stop asking candidates about their salary histories. In fact, many states have already put in place laws that bar employers from some inquiries. Other states are planning to do so, and for good reason: what a person made on their last job has nothing to do with whether a person can handle the position for which they’re applying. What’s more, the question perpetuates gender discrimination in pay through de facto wage suppression as employees change jobs.


So, when there’s a job opening, first determine the salary. That salary is what you’ll pay your new hire, regardless of race or gender. If you need help with pay equity best practices, you might want to contact a human resource specialist such as Mercer.  


You should also make your job descriptions and titles neutral by removing gender-specific references and pronouns and focusing instead on work-related requirements and experience. Likewise, it’s also a good idea to remove discrimination from your job screening questions so that women and people from diverse backgrounds have a fair shot at getting the job and at equitable pay.


Assess the Company Culture

Before tackling equal pay issues, you must first attend to any structural issues affecting your organization’s culture. Perhaps the company has an unwitting bias against hiring, promoting, or compensating female or diverse applicants equally. If it does, find an executive sponsor to back you on equal pay and ask them to champion company pay initiatives. You should also provide data to show how equitable pay helps retention, lowers the risk of lawsuits, and improves the bottom line. Further, be sure to include women in your hiring decisions.


Review Your Employees’ Compensation

After you’ve scrapped inequity upon hiring and have secured a sponsor to help with pay issues, it’s time to review your current payroll. You’ll need to gather data, create a spreadsheet or report, study the data for patterns, and highlight trends. Note that patterns or trends don’t necessarily mean something’s wrong – they merely show a finding that’s different than expected. 


Pinpoint Inequities

Coming across some unexpected data or trend will prompt you to look closer. As you do, ask yourself questions like, “Why are our new male IT people getting paid more than the experienced females in IT?” “Why are females making just 72% on average of what males are making?” It’s best to answer these questions yourselves before an employee files a grievance.


Correct Individual Issues

It’s a fact: hiking the pay of underpaid employees can result in a big hit to your payroll. However, two people in the same job within your own company simply must be paid equitably. Get any fixes done quickly and let the company begin to heal from uneven pay practices.


Address Systemic Issues

An effective way to ensure equitable pay is to establish a pay program that’s based on jobs and career levels. Using such a program, you can start to educate your managers about what to offer for salary hikes based on preset criteria. Also, rather than raising salaries based on managerial recommendations, consider providing measurable performance-based raises.


Now you know a lot about pay equity best practices. Don’t ignore the situation at your company. 


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