The Three-Step Approach to Pay Equity


No one wants to work for less pay than someone else doing the same job. This is, however, a familiar feeling for many people who have faced various forms of pay discrimination in the workplace. Resolving these issues is a must for any enterprise looking to lead in today’s world. Here’s the three-step approach to pay equity, and how it can improve organizational operations while also making a better workplace for all.

1. Data Collection and Third-Party Pay Equity Analysis

You’re unlikely to do a thorough enough job of a pay equity analysis by simply running an internal company audit. Even with the right intentions and an action plan, there are some roadblocks to organizations successfully doing this on their own.

Despite the fact that the majority of people generally agree that people should be paid the same for doing the same work, regardless of demographics, things aren’t this simple when actually investigating this within one’s own environment. There’s a huge amount of subjectivity that comes into play, such as what constitutes “comparable work,” as well as determining how different education levels and prior work experiences factor into pay differences. It’s easy for issues to be overlooked, or in some cases, pushed under the rug, when pay equity audits are done without outside help.

Due to this, enterprises should look to partner with an organization that can provide the right consulting and technology resources to do a proper pay equity analysis. Going this route will increase the likelihood of accomplishing the intended results the first time, which will make employees happier, while also cutting down on operational redundancy. When hard data is being collected, and then analyzed by outside professionals, it’s much more likely the facts will rise to the top.

2. Creating Models and Utilizing Specialized Knowledge

There are many factors at play when evaluating whether there’s a gender pay gap within an enterprise. While it would be great if this were an easily solvable problem for companies and organizations across the country, the facts show this clearly isn’t the case. In 2020, according the Pew Research Center, women on average only earned 84 percent as much as men.

While there are some encouraging signs that are showing a gradual movement toward wage parity—such as the improvement in workers aged 25-34, which in 1980 had a 33-cent wage gap that has now shrunken to just seven cents—there’s still much to do here. To make further progress toward an equitable pay structure within your organization, it’s important to work with the experts who can help make this a reality through modeling collected data, as well as providing more subjective input.

Of course, you’ll want general consulting and technology tools to assist in closing pay gaps. But these are broader solutions, which aren’t going to solve more specific issues. In certain cases, enterprises will want to engage with economists, statisticians, psychologists, and other niche professionals to better understand and remedy pay equity problems. The deep knowledge and expertise from these individuals can help identify issues that would otherwise be overlooked by those will less intensive training. Furthermore, developing models in conjunction with experts can help clarify the areas that need to be addressed to close pay gaps.

3. Assessing Risk and Employing a Pay Equity Calculator

The third step in approaching pay equity within an organization is much easier to grasp and provide than the first two elements. Once data has been used to create models of pay gaps, it’s time to dig into where there are clear discrepancies between various individuals. Seeing who is paid more or less relative to what would be predicted from the previously completed modeling does this. When you find individuals who are paid less that belong to one of the groups at-risk for pay disparity, it’s easy to identify and resolve these issues.

It’s also smart for organizations to deploy a pay equity calculator, such as the web-based tool offered by Mercer. This makes it simpler than ever to identify exactly where there are pay gaps throughout an organization—both on group and individual levels. Having this in your toolbox can allow for continual progress toward total pay equity.

There’s much that needs to be considered when closing pay gaps. Throughout the process, it’s also essential to remember to keep privacy and compliance front-and-center, to avoid and costly mistakes that could lead to litigation. When done well, a pay equity audit can lead to a much more fair and optimized workplace.