Today’s companies can only expect to grow and scale when they’re able to attract and retain the best talent. The hiring landscape is vastly different today, too. Candidates are interviewing your organization just as much as you’re interviewing them. And one aspect of your company operations and culture that matters is pay equity.
If you’re wondering why a career professional might care about how you structure pay for everyone else, keep reading. There’s more to pay equity than you might know. We’ll get into the core definitions and benefits of adopting a fair and equitable pay platform, as well as answer why any employee might want pay equity.
Understanding Pay Equity
Don’t mistake pay equity with pay equality. The terms encompass different ideas. Pay equity typically refers to equal pay for equal work, regardless of the employees’ demographics. This pay includes all aspects of compensation, including base salary, bonuses, overtime rates, benefits, and opportunities for advancement.
Alternatively, pay equality often refers to the same ideology – equal pay for equal work. However, pay equity dives deeper into understanding why people might fall into varied demographics and how to level the playing field with those pay disparities.
When you’re looking to incorporate pay equity practices into your organization, you’ll consider these more common demographic classes that might impact a candidate’s earning potential:
- Sexual Orientation
For many employers, pay equity is an umbrella concept that encompasses all issues related to fair compensation. For your business, it’s a lens through which all of your pay and benefits decisions should be made.
How Pay Equity Benefits Employers
Pay equity isn’t just an employee-facing term. There are actually a host of advantages a business can leverage when pay equity and fairness concepts are involved. For starters, you can attract a broader and more diverse workforce when you promote pay equity enforcement. Focusing on fairness among the ranks will also help to reduce turnover since staff will want to work for an organization that promotes awareness and equitable best practices. Workplace loyalty matters, especially as you explore better employee retention strategies.
For many small businesses, there are also compliance concerns to note. Providing equitable pay initiatives will ensure you remain aligned with state and local employment laws. The number of employee lawsuits regarding pay has grown in recent years, only solidifying the need to address pay and benefits practices.
What Today’s Candidates Are Looking for in a Company
Pay equity isn’t a trendy nuance to be overlooked. In today’s hiring market, applicants are more decisive about the employers they choose. And they’re looking at your company culture more intently than ever before. Unfortunately, there are still major pay disparities out there, despite many organizations’ best efforts to address them. In fact, a study in 2021 showed that women are still earning an average of 82 cents for every dollar earned by men. And for those who represent women of color, that wage gap is even broader. Shockingly, the Economic Policy Institute found that wage gaps among black and white employees were actually more significant in 2016 than they were back in 1979.
With the onset of social media and celebrity activism, pay equity has been brought back to the forefront of today’s workplace discussion. And it’s a hot-button topic for candidates right now as they explore new career options. If you want to effectively attract and retain the best staff, pay equity needs to be at the forefront of your company’s initiatives.
How Companies Ensure Pay Equity Best Practices
To embrace an equitable pay platform, it requires a series of efforts that address more than just pay and benefits. Companies are also exploring complex causes, including systemic contributors to wage disparities. There are strategies you can be implementing to identify and address social norms in the workplace, biases, and advancement opportunities. And pay equity can be monitored with proper wage audits.
When developing a pay equity audit process for your company, consider the following key elements for the equation.
First combine all the annual salaries of your full-time and year-round employees who represent the demographic you’re looking to compare. Then determine the median salary for each demographic. Finally compare the median salaries for each demographic to each other to identify pay gaps.
This is just one of many calculations used to uncover wage disparities. But if you’re not already auditing your company’s pay and benefits platforms, it’s a great place to start. From there, you can also explore other audit methods that might include comparing weekly salaries or benefits considerations. Whatever audit process you use, make sure you’re measuring equally across the board and in conjunction with any federal or state wage laws.
How to Have the Pay Equity Discussion with Your Teams
Half the battle in addressing pay equity is creating an equitable set of processes by which your company abides. The other half of the effort involves communicating your pay equity strategies to your employees and potential candidates. So, how can your company roll out its plans for addressing pay equity, so everyone understands your initiatives? Consider these best practices as you develop your communications strategy:
- Make sure your compensation systems and platforms are transparent. This might include sharing goals, metrics, performance, and advancement requirements.
- Communicate regularly, not just about the roll-out initiatives, but about ongoing efforts to improve pay equity.
- Provide ample and thorough training for all your managers and supervisors about the hiring, compensation, and retention strategies you have in place.
- Standardize pay ranges and guidelines for the various roles and responsibilities within your company.
- Audit and improve job descriptions ongoing to make sure you’re promoting your need for diverse, skills-based employees, offering equitable pay for all.
As you wrap up Q4 for your business and forge new strategies and recruiting initiatives for the new year, consider looking closely at your pay equity. It’s a new hiring market, and today’s companies are improving their cultures to attract top talent. Pay equity plays a big role in that conversation and effort. And ExactHire can help you realign your company’s position to embrace fairness and equity in a way that attracts the best employees.