The pay equity challenge: Why organizations should act now

Despite decades of legislation, pay gaps persist across gender, race, ethnicity, sexuality, disabilities, and parenting status. Women, people of color, LGBTQI+ individuals, and people with disabilities face significant pay disparities.  While 70 percent of companies are taking action on pay equity, many are reluctant to be transparent about their efforts, and only a small percentage share the results of pay equity analyses publicly or with their employees. In this thought leadership piece, we explore the drivers behind the need for pay equity action, the current state of pay equity initiatives, and provide an overview of a comprehensive pay equity solution.

Current drivers of pay equity include:

• The race for talent: Fair pay is a top priority for workers, and companies that offer equitable compensation have a competitive advantage in attracting and retaining talent.
  
• Pay Transparency: Transparent communication about pay opportunities can reduce employee turnover and foster trust between management and employees.
• Regulatory Mandates: Federal and state laws are putting pressure on employers to compensate and manage their workforce fairly, with pay transparency laws becoming more prevalent.

A comprehensive pay equity program comprises:

• Peer Benchmarking: Use external marketplace pay levels and practices as benchmarks to drive competitive compensation.
  
• Advanced Internal Analytics: Analyze hiring, promotions, and performance management practices to identify root causes of pay inequity.
• Remediation: Address pay equity findings, address historic inequities, and implement plans to prevent future issues.
• Prevention of future issues: Establish a job architecture, compensation structure, and communication campaign to ensure ongoing pay equity.