Unequal salaries, most notably towards women and people of color, has been brought to light in a significant way in recent years and some of the employers who allowed it to happen have been held accountable, deservedly so. Compensating workers unfairly has proven to be detrimental to both employee AND employer, but even so it’s an outdated practice that appears difficult for the business world to overcome. Our blog this week helps to remedy that.
Difference between equal pay and pay equity
Our conversation about pay equity won’t be productive unless we first explain what it means, and how it’s different from equal pay. Pay equity means paying employees who perform similar duties the same while taking other factors such as tenure and experience into consideration. It serves to eliminate gender and race discrimination. Pay equity differs from equal pay in that equal pay is identical compensation for the same duties, while pay equity is the same pay for work of equal value. It addresses the imbalance in how employers might value some duties over others, when in fact they all contribute equally.
Why is this difference important? Simply put, not only is it fair to compensate employees equally, it contributes to a healthier company culture by diversifying leadership roles, encouraging talent retention, and contributing to productive workplaces that meet objectives. Not compensating employees fairly dismantles all these things. It’s worth making an effort to pay employees equally for their work.
How to identify and address unequal compensation practices
- Perform a salary audit. It’s not difficult to recognize disparities when they’re laid out in front of you but just the same, it can be helpful to outsource this task. An objective set of eyes may be better able to identify problem areas. Keep in mind that pay disparities MUST be able to be explained by legitimate reasons. If you can’t back up the disparity with a legally-acceptable reason, it’s a discrepancy that needs to be corrected.
- Making adjustments in assessing value. Using the information from the audit, examine how the decision is made on what to pay an employee. How is the value of a duty determined, and if some lower valued duties are in fact providing as much benefit as others, why was the lower pay rate chosen? It takes retooling existing mindsets in order to maintain constructive change.
- After addressing, shine a light on pay. There’s a harmful tradition of keeping pay rates confidential and it significantly contributes to unfair compensation. By practicing transparency on salaries employers can much more easily manage imbalances that arise AND it also serves to build on employee trust, a wildly valuable asset to any business.
- Provide a metric system of pay for employees. This supports the transparency component of pay equity because it offers employees a clear tool for understanding their pay rate AND working towards salary increases.
- Update often. Don’t allow pay practices to gather dust. Keep evaluating, keep researching, and keep making adjustments to ensure fairness!
Our intent with this discussion is to give employers a sense of direction in improving upon the way they determine salaries. If you’re still feeling unsure on how to start, we can help! Eos HR is a team of HR professionals partnering with small businesses to implement smart solutions to meet challenges, large or small. Schedule a free consultation today to learn more.
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