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Greater Transparency and Action Around Pay Equity Is Needed for Employee Engagement

A convergence of regulatory, political, social and economic forces are shining a bright spotlight on pay equity solutions.Yet the “2019 Pay Equity Practices Survey of C-suite and Reward Leaders,” conducted by WorldatWork and Korn Ferry, found that only a slight majority of the more than 750 organizations polled are addressing pay equity in their workplaces.

Furthermore, one-third are just considering doing the necessary work, while seven percent say pay equity is not at all on their company’s radar. Even when pay equity gaps are uncovered, large organizations are taking a measured path to address them, leaving much room for improvement.

Who’s doing their share? 

The study also revealed that a majority of those companies engaged in pay equity activities are sharing their intent and findings with senior leaders (90 percent) and people managers (65 percent), but keeping largely mum to the workforce at large. This is a cultural misstep. Part of the solution to pay inequity is transparency and highly effective communication about how an organization designs, delivers, and navigates its pay systems. 

Not on a (pay)roll

Also notable is that while there is a clear focus on gender pay equity in the media and regulatory arenas, organizations are primarily focused on looking at gender and ethnicity inclusion (46%) when conducting analyses. 

Only 36% of organizations surveyed take additionaal demographics such as age into account. Additionally, most organizations adjust pay equity for less than 5% of their workforce. According to the survey, a typical organization treats between one to five percent of their employees with a pay equity increase with, on average, a five percent increase, implying that total impact on payroll typically ranges between 0.1 to 0.3 percent of total base salaries.

Where to begin 

If organizations are trying to build a culture of trust, they will likely find that non-action around equity issues will be interpreted as a missed opportunity from employees. Full transparency on compensation topics and a stronger employee understanding of an organization’s compensation philosophy and processes cultivates greater trust and a sense of fairness. A workforce that trusts its leaders and feels fairly treated is more committed and motivated to deliver results. As the professionals charged with evaluating compensation throughout an organization, Total Rewards leaders are in a unique position to help businesses ensure equitable and rewarding pay practices.

Scott Cawood, Ed.D.,CCP,GRP, President and CEO, WorldatWork, [email protected]

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