For years, the legal landscape surrounding pay has become increasingly complex. Employers have to justify salary disparities between jobs of equal value.
However, it is no news that women earn 19 % less than men when comparing all working women to all working men. One reason for this is that women often work in professions that are known for their comparatively low income. As a result, women are clearly under-represented in the best-paid jobs – not to mention people of colour. To change this, human resource departments need to take corrective measures to achieve pay equity within their company.
In this first article, we highlight some of the benefits of conducting a pay equity analysis and how it creates a workplace of trust, enthusiasm & commitment. But first: What is pay equity?
What is Pay Equity?
Pay equity can easily be confused with equal pay. However, it is not about men and women earning equal wages in similar jobs. Pay equity means equal pay for work of equal value. This is why the analysis compares the value and pay of different occupations, such as a marketing specialist and IT specialist.
What is a Pay Equity Analysis?
When people hear the word pay equity analysis they automatically assume that it is about paying everyone equally. However, this could not be further from the truth. The analysis is a method of researching pay rates within your company. It aims to resolve the issue of undervaluation of occupations typically performed by minority groups of society. In general, this means that the analysis supports the elimination of overall wage disparities based on race, gender or other unjustified criteria.
Benefits of Pay Equity for Your Organisation
Pay equity analysis makes the alarm bells ring for many business owners and managers because of many associate costs with it. The result? Wages are not looked at or touched at all. However, when you check and compare the wages of all employees regularly it can provide you with many competitive advantages.
Stay Compliant
It enables you to comply with the law and avoid penalties and potential wage discrimination lawsuits. In addition, you minimize the risk of employees talking negatively about their payment and treatment within your company. This could result in your brand & company losing its reputation and thus damage your business in case of any discrepancies.
Positive Culture
A regular analysis and adjustment of wages in case of unjustifiable disparities improves work ethics and reduces turnover. Your employees will have the confidence that you will take care of them and ensure pay equity. They will be more committed to the company, which will show in the quality of their work.
Higher Retention
During the analysis, you will also have a closer look at your job descriptions and requirements. This will probably lead to revising and updating them for future positions. The greater precision in the definition of requirements and tasks of the various jobs leads to a better match between the profile of the potential candidates and the job requirements. This, in turn, will guarantee competitive pay rates that attract new employees and lead to even higher retention and improved performance.
Budget Allocation
You may also notice that in the past you have calculated your budget on the basis of wrong assumptions regarding tasks, projects & responsibilities of different departments. With the new insights into the distribution of tasks in the company, you can allocate the budget much more efficiently, because you know exactly who is responsible for what.
Overall, a regular pay equity analysis is highly recommended. It not only ensures compliance with the law, but it is also very beneficial for creating a workplace of respect and equality. Wait for the second part of this article on how you can conduct a pay equity analysis.
Editors note: This article was written by Novative's newest Marketing Julia Schurr
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