Two crucial deliverables for HR leaders are delivering fair pay and complying with pay equity legislation. These goals are always challenging to achieve. This article looks at what it is, why you should prioritize it, and how to address it in your organization.
What is Pay Equity?
Pay equity refers to equal compensation of employees for work of comparable value regardless of their gender, ethnicity, race, or status. The term ‘equal pay’ on its own encompasses beyond equal wages. It considers other benefits, including allowances, merit payments, discretionary pay, performance payments, and superannuation.
The conversation around equal pay may appear black and white, but it is very complicated. It entails more than eliminating biases; there is much more to consider. Employers are tasked to put their employees on a weighing scale and rate them based on several other factors, including their education, work experience, and responsibilities while comparing that with their business’ long-term stability.
The U.S Equal Pay Act(EPA) covers all forms of compensation, including salary, bonuses, overtime pay, life insurance, vacation and holiday pay, hotel accommodations, reimbursement for travel expenses, cleaning or gasoline allowances, and benefits for both men and women. Since the passage of the act, female labor force engagement and participation have risen significantly by over 50% compared to the early 60s. Additionally, the Fair Labor Standards Act supplements EPA by establishing a minimum wage, overtime pay, child labor standards, and record-keeping for part-time and full-time workers in the Federal, State, and local governments and the private sector.
Why Should You Prioritize Fair Pay?
The most direct answer to this question is: Because it is the right thing to do. While there are repercussions to not complying, it is the social responsibility of every employer or HR executive to implement pay equity policies. Aside from that, employers also stand to gain by:
- Ensuring the business complies with equal pay regulations
- Protecting their businesses from a discrimination law suite
- Attracting a top talent
- Improving productivity, efficiency, and motivation
- Reducing workplace turnover
From the following merits, progressive employers understand that avoiding costly litigation is not the only risk they can evade. Equal pay offers businesses a chance to create a more competitive environment, which ultimately returns as profit and an enviable reputation. Equal pay screams equal opportunities and demonstrates desirable value to your employees or potential employees.
How Can You Address Equal Pay at Your Organization?
We acknowledge that employers are significant stakeholders in the issue of the unequal pay gap. With that in mind, breaking this historical cycle of discrimination
in the workplace starts with empowering organizations with vital information towards achieving this form of equality.
Here are some considerable ways you can bridge the pay gap at your organization:
1. Auditing your pay practices– conducting a pay audit evaluates and reviews how the company allocates and wages other benefits. The result often targets specific areas. For example, it will show if women receive less pay than men for the same work.
2. Creating clear and transparent roles and job descriptions– avoid ambiguity for different positions or levels and disclose their salary ranges right from the start.
3. Ensuring fairness while hiring and promoting employees– provide equal feedback to all employees on their performance, assign tasks fairly as well, and reward based on merit to motivate everyone, regardless of their gender, race, ethnicity, or sexuality, to work harder.
4. Create equal chances for negotiation– create an environment that applauds rather than penalizes negotiations by employees that are often under-represented or undermined in the workplace.
Create a distinction between compensation and performance reviews– performance reviews often set the stage for higher compensation. However, the former should remain centered around roles, career goals, and advancements for promotion. On the other hand, compensation reviews should focus on creating room for negotiations for increased pay after the promotion.
Equal pay for equal value is a fundamental human right. Although the world has made considerable strides in narrowing the disparity, the push for equal pay is still contentious. It should be engraved in the value system of outstanding leadership to ensure all employers chase the same price. Regardless, it must begin with promoting equality with a holistic approach of seeing every person as deserving regardless of any other unchangeable factors.
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