Effectively addressing pay equity should be a top priority for any business. Never before has this been such an essential endeavor.
There are two main themes as to why addressing pay equity is so important for enterprises today. The first reason is straightforward. Pay equity needs to be a part of the gameplan for every firm today because it’s the fair stance.
Even though much progress has been made in terms of closing pay gaps over the past several decades, they still exist. A 2018 study from the Center for American Progress found that Hispanic and Latino women will, on average, make $1.1 million less over the course of a 40-year, full-time career than a white man doing the same work. The numbers weren’t much more encouraging for other race demographics for women, with Asian women scoring the smallest differential at an approximate $240,000 deficit.
Many organizations aren’t even aware they’re not creating equitable pay for employees. But this isn’t an excuse. These issues need to be addressed in order to create an equitable workplace. Furthermore, talent is becoming increasingly intolerant of organizations that don’t effectively address systemic issues such as pay gaps. Workforces today are expecting more of their employers. This means meeting demands related to fair pay.
The other main factor that makes addressing pay equity important is the risk of legal issues. Especially enterprises that operate over a vast array of localities, there are ever-changing regulations and standards when it comes to auditing and adhering to fair pay practices. Failing to meet these measures can lead to potentially negative outcomes for the organization. Beyond this, there has been increasing attention paid to companies that fail at pay equity. This can either help or damage brand recognition for a long time depending on how you handle it.
How Can Organizations Effectively Address Pay Equity?
There’s no shortage of reasons for why it’s important to address pay equity. But how are organizations supposed to effectively address pay equity? One of the first steps is typically to undergo a pay equity audit.
There have been several cases in recent years where enterprises have been fined millions of dollars for violations related to pay equity. It’s important to remember that pay gaps aren’t always intentional. Many organizations have pay equity issues without realizing it. A pay equity audit can reveal any of these discrepancies by digging down into data to find patterns based on demographics.
It should go without saying that completing an effective pay equity audit is no small task—especially at enterprises with large workforces. In many cases, it will make sense to find a partner organization to assist in running your pay equity audit. There are several reasons why turning to an outside firm for consult can be wise in this instance:
- Knowledge of location-specific legalities and expectations – It can be an exercise in the Kafkaesque to navigate the local laws of many places. Having a partner to show you the way can keep your organization in good legal standing, while also keeping employees satisfied.
- Expertise on your exact needs – When it comes to highly specific organizational tasks such as running a pay equity audit, there’s likely not going to be an expert on any internal teams. By working with an outside enterprise, you’ll gain access to people who have worked on similar problems to yours countless times—allowing them to build more effective protocols in less time.
- Get the tools for continued excellence – Proprietary technology like pay equity calculators can help businesses identify and rectify issues sooner. Leveraging the right tools can make all the difference in creating more equal compensation.
Every organization needs to decide how they want to address pay equity. Those who don’t take the proper action will be forced to face the consequences down the line.