With a cost of living crisis and a wave of states adopting salary transparency laws and salary history bans, the time has come for companies to take a closer look at their pay practices. Pay equity is not just about fairness in wages, it is about protecting your employees' wellbeing and employer brand. Having fair pair practices can prevent lawsuits for discrimination based on gender, race or sexual orientation.
The widening wage gap for women of color during the pandemic overshadowed progress for women in the workplace. According to LeanIn’s 2021 study, Black women are paid 42% less than white men and 21% less than white women, while Latinas earn 49 cents for every dollar a white man makes. Regularly conducting a pay equity analysis or a gender pay audit can ensure that you are compliant with local pay laws and are offering competitive salaries to attract talent.
But what is the best practice for addressing the gender pay gap? Salary transparency on job descriptions? Banning salary-history questions during hiring? Annual compensation reviews?
To help you achieve pay equity for your employees, we asked HR managers and business leaders this question for their best insights. From matching employees’ skill sets with their compensation to forgoing salary negotiations while hiring, there are several tips that can ensure pay equity for your employees.
Here are 10 pay equity best practices to bridge the gender pay gap in your organization:
1) Match Employees’ Skillsets with Their Compensations
2) Create a Safe Space for Anonymous Discourse
3) Use Outside Auditors and Go Beyond Salary
4) Allow for Fair Negotiations
5) Check in With Employees Who Do Not Ask for Raises
6) Follow the Job Market and Compensate Accordingly
7) Prevent Pay Inequity Starting with Job Offer Negotiations
8) Annually Review Compensation Inequity
9) Involve an Employee-led Committee in Discussions
10) Implement Salary Bands to Support Women
1) Match Employees’ Skill Sets With Their Compensations
The best way to ensure employee pay equity is by thoroughly evaluating each employee's skillset and experience and then mapping those qualifications to the corresponding job title and salary range. Antreas Koutis, Administrative Manager of Financer has seen firsthand how this process can help to ensure that employees are fairly compensated for their skills and experience.
When I was first hired by my current company, I was given a job title and salary range that did not reflect my prior experience or skill set. After bringing this to my manager's attention, we worked together to create a new job title and salary range that better matched my qualifications.
This process not only helped to ensure that Koutis was fairly compensated but also gave him a greater sense of satisfaction with his employment. By taking the time to evaluate each employee's skillset and experience, companies can ensure pay equity for everyone on their team.
2) Create a Safe Space for Anonymous Discourse
One crucial step to achieving pay equity is not just to allow but encourage employees to openly discuss compensation. John Li, Co-Founder & CTO of Fig Loans, advises making space for those conversations. “We’ve made it clear that they won’t be retaliated against and that management and employees are on the same side - we want everyone to feel valued and treated fairly.”
We have quarterly teamwide meetings about our pay equity efforts, ask for feedback, and give employees a space to do so anonymously if they prefer.
While getting feedback in person or through other channels is great, you want to remove any burden from teammates, especially those belonging to a minority, to speak up publicly. Li states, “We don’t care if our employees name themselves - the point is to improve our workspace, and we need honest discourse to achieve it!” Train managers to discuss compensation decisions with employees and explain everything. Transparency is the key to making it all work.
3) Use Outside Auditors and Go Beyond Salary
Auditing your pay equity once isn't enough, especially as you work to change a system that's been broken for so long. It takes time to erase unconscious biases. Marina Vaamonde, Real Estate Investor & Founder of HouseCashin suggests using an outside compensation management software to annually audit pay equity.
Once you're on track, you want to stay on track by measuring critical KPIs, report any discrepancies, and create solutions. Vaamonde says, “It's crucial to go outside your organization for equity audits - you need analysts that aren't close to the system to reduce bias.” Beyond salary, these pay equity audits must include bonuses, stocks, and other perks that can significantly affect the results.
4) Allow for Fair Negotiations
According to D&I Leader Marshelle Barwise, pay equity is a long-standing issue by design. Barwise warns, “Employers will have to consciously do away with intending to attract the best possible talent at the lowest possible salary if we want to overcome the issue on a broader scale.”
Working professionals should continue to support widespread salary transparency, learn how to do market analysis, and go into every new opportunity ready to negotiate based on the market analysis information they know.
5) Check in With Employees Who Do Not Ask for Raises
Another solution to building a more equitable work environment and culture is having management do routine compensation reviews of employees who have not asked for raises. Shaun Connell, Founder of Writing Tips Institute, says, “Sometimes, people who are the most vulnerable or disadvantaged don't ask for raises out of concern that they have more to lose.”
Go out of the way to make sure that they are not falling behind just because they're being careful and conscientious. Connell says, “We've found that this has built an incredibly loyal and satisfied workforce because everyone knows that we are actively making sure nobody is left behind.”
6) Follow the Job Market and Compensate Accordingly
Pay equity means listening to the market when hiring. If the candidate negotiates a 10% increase in their starting salary, this points towards a change in the market. It shows that their skill set is growing in demand and value. As it does so, their rate of compensation must also follow. Should you hire this candidate, it sends a message to your team that the work is worth more than it was before.
Max Wesman, Chief Operating Officer of GoodHire says, “Employees in the same position may have accepted a lower salary in different market conditions, but they should be rewarded - not penalized - for their loyalty to the company. As such, they deserve a raise at least in line with your new hire.”
Honesty and transparency are essential for pay equity in the workplace. Asker Ahmed, Director & Founder of iProcess says, “My team researches pay rates regularly to ensure our people are getting the most competitive compensation out there. We also schedule regular 1:1 meetings with employees and listen to employee requests regarding salaries.” When employees are satisfied with their salaries, morale is boosted and they often look forward to their work.
With a more market-centric compensation structure, you'll address pay inequities before they start. This is a crucial step in keeping spirits high and preventing wage compression. It minimizes resentment from longer-tenured employees and keeps your business competitive during future rounds of hiring.
7) Prevent Pay Inequity Starting with Job Negotiations
Pay inequity begins at job offer, and women and underrepresented groups have historically been less likely to negotiate at that phase. This is the genesis of pay equity issues and can be prevented by eliminating or greatly limiting negotiation at the offer phase.
The ability to negotiate in order to hire the best talent is a tool most organizations rely heavily on, and hard to imagine living without. Rachel Kleban, CEO & Principal Consultant of Rachel Kleban, LLC states,
“With solid pay guidelines and clear, upfront communication with candidates as to why you don't negotiate (pay equity is a compelling reason for most!), I have found it to both simplify the process and reap tremendous rewards down the line for pay equity.”
The only requirement is that you don't make exceptions. The integrity of the practice relies on consistency and transparency. If you think you will need to make exceptions in certain roles or levels, decide that upfront and put guardrails around how you will negotiate in those situations.
Deepa Tailor, Owner and Founder of Tailor Law ensures pay equity by using a simple system of fixed entry salaries and raises based on billable hours. It does not leave much room for negotiation, and some employees might not appreciate it, but it is one of the best ways to ensure pay equity. Tailor says, “It prevents conflict because if one person is given a raise, everyone would want a raise as well.” This strategy would not work for creative fields such as arts, performance, and movies since talent and skill play a much bigger role in such industries. It makes sure employees are paid fairly and creates a predictable payroll for the employer.
8) Annually Review Compensation Inequity
Annual compensation reviews play a key role in ensuring pay equity. This allows employees to discuss their salary and performance with their managers, and work together to identify any discrepancies or areas that could be improved. Checkr actively tracks the demographics of their workforce throughout an employee's lifecycle. Linda Shaffer, Chief People Operations Officer of Checkr states, “This not only allows us to identify any existing inequities, but also helps us track progress and make adjustments over time.”
Overall, there are many different strategies that businesses can implement in order to ensure pay equity for employees. By being proactive and focusing on transparency, fairness, and equality throughout the hiring process and beyond, we can create workplaces where everyone is valued and rewarded for their contributions.
9) Involve an Employee-led Committee in Discussions
To ensure fairness, encourage participation, and secure employee buy-in while implementing pay equity, CEO & Co-Founder of Circuit Jack Underwood set up a pay equity committee selected by employees for collective representation. Jack says, “The committee helped inform our team about pay equity and discuss a plan of action with management.”
Once leadership settled on a plan, the committee updated the team and explained the process moving forward.” Since pay equity is all about creating a more fair workplace, employees should feel empowered to take an active role in the process. A committee provides a way for teams to have their voices heard. By having representatives for teammates, pay equity process moves quickly.
10) Implement Salary Bands to Support Women
One of the best ways to ensure pay equity is to have salary bands as opposed to rigid pay scales. Salary bands help women and women of color, who are underpaid on average, get the salary they deserve.
Luciano Colos, Founder & CEO of PitchGrade says, “One of my clients, a growing tech company, implemented salary bands in order to ensure pay equity.” They found that women were not being paid the same as men on average, and they wanted to fix this. To ensure pay equity, they implemented salary bands that allowed employees to negotiate their salaries within a certain range.
This took away the employer's ability to influence the negotiation process, and there was no room for unconscious bias or employer power to influence the result. Since implementing salary bands, they have seen pay equity increase, and they have also seen employee satisfaction increase as well.
At the end of the day, we all want to be treated fairly. We want to be compensated for our work and rewarded for our achievements. Achieving pay equity is important because it can help employees have better mental health and less stress. It can also help the company improve its reputation by treating their employees with respect.
Help your employees feel valued by offering perks that support their wellbeing at work. Check out the most popular employee benefits in the 2023 Perk Study.
About the author:
Kisha Velazquez is an HR tech content marketing leader and Compt's Senior Content Marketing Manager.