Combating Pay Inequality
Inequity has become more of a priority topic in organizational leadership conversations over the last few years. Fueled in part by the social movements of our time [Me Too and Black Lives Matter], many employers have taken the stance to re-evaluate their processes and culture to ensure that equity is achieved throughout their organization.
One of the largest and most visible areas of inequity in the workplace revolves around pay. In 2019, women earned 82 cents to every dollar earned by men*. Based on the most recent data from Pew Research, in 2015, average hourly wages for black and Hispanic men were $15 and $14, respectively, compared with $21 for white men^. While there has been greater awareness over the years and the gap has been narrowing, these numbers indicate that wage disparities are persistent. Below are ways that employers can combat pay inequity.
Stop Asking for Pay History
Historical pay does not necessarily reflect the value or potential a candidate can bring to an organization. Asking for this information may already be outlawed in your state and using this as a factor to help determine compensation can further promulgate a cycle of inequity. Instead, employers should benchmark their roles based on their compensation philosophy and the market rate for this position.
Reduce Manager Discretion
Hiring managers often make unilateral decisions at the behest of a candidate. While it is always encouraged for candidates to have the conversation and be comfortable with their pay, it is unrealistic to believe that everybody would be comfortable and upfront discussing and negotiating a salary. To help level the field, Finance should work proactively to develop current pay ranges and work with HR to oversee the consistency in application and reflection in new offer letters.
Conduct Pay Audits
Combating inequity does not have to start at the time of hire. Organizations can conduct pay audits to ensure that no inequity exists between two different individuals with the same credentials and in the same role. In addition, pay audits help to ensure and correct historical pay differentials as a result of differences in starting salary:
For example, somebody’s starting salary was $50k, but an equally qualified candidate was hired at $60k after negotiations for the same position. After three years at a standard 3% increase year over year, the person at $60k would be paid approximately $900 more per month due to the pay increases being a function of base salary.
An audit will open the opportunity for employers to examine and document various circumstances that may justify pay differentials and reduce the risk of litigation down the line.
Systemize Pay Increases
While performance is often a factor in determining a pay increase, employers can consider systemizing pay increases to fall within a specific, guaranteed range to ensure that all employees, regard of performance, can see an increase year over year as a reflection of the cost of living and tenure when it is within the business’s ability to do so. However, striking this balance can be tricky, to maintain the motivation of staff while ensuring inequity does not perpetuate.
It is up to leaders and those in influential positions to lead by example and drive positive change where and when possible. While we are moving in the right direction as a society, inequity still permeates many areas of our lives. To help support these efforts in your workplace, partnering with HR has often been vital in ensuring system change within an organization.
If you have any questions, please do not hesitate to reach out to Kiwi Partners' HR services team to discuss further.
Sources:
*: Census.gov