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Guide: Structure and check for pay equity

Act on your findings

If you don’t find inequity, high five! Check again after your next compensation planning cycle.

If you do find inequity, it’s time to dig deeper:

Seek legal counsel. Before taking any action, check back in with your legal advisor to understand the context and requirements for making changes.

Check your people processes. And do it often. If you do find inequities, first look into what’s driving these differences and if your people processes are working as intended. For example, if you’re not certain that your performance management system is totally objective, consider running your analysis with and without these variables to check for bias in performance ratings or promotions. Also, take note of all the decision points within your processes. Who is responsible for which decision? How might people respond differently based on the training, norms, and incentives surrounding the decision? Your results may surprise you. For example, in 2010 Google found that female engineers were self-nominating for promotion at a lower rate. This resulted in significant promotion rate differences. The solution? Showing employees the data, reminding everyone to put themselves up for promotion if they’re ready, and making sure managers were accountable all led to promotion rates equalizing.

This is also the time to look at your compensation processes again and ask questions like:

  • Is your compensation philosophy unintentionally creating inequity?
  • Is the organization consistently using pay structures?
  • How might the assumptions you made in your analysis affect the finding?
  • Can any inequity be explained by factors that should impact compensation?

Consider pay adjustments. It’s important to make changes in the context of your compensation philosophy. If you see a significant difference between groups where no difference should exist, consider a one-time pay adjustment. For example, in 2015 Salesforce identified a gender pay gap at their company, and has since committed to adjusting the inequity. While immediate adjustments can help achieve equity in the short-term, it’s critical to investigate and fix the root causes as well so you can ensure inequities don’t creep back in over time.

Hold decision-makers accountable to reducing bias. In most organizations, managers play a big role in addressing pay equity as they are responsible for the majority of pay and performance decisions. Start by educating managers about the importance of gender pay equity and how their own unconscious biases might creep into the pay process. During compensation planning cycles, remind managers to be aware of gender pay equity, let them know their pay decisions will be reviewed, and share back any appropriate data with them afterward. Some organizations also form internal committees to regularly review gender pay data.

Ensuring gender pay equity requires long-term commitment from everyone. Whether you’re starting with a simple spreadsheet or conducting a full compensation analysis, organizations of all sizes are responsible to create fair and equitable workplaces.

Explore more in People Analytics.

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