As the topic of pay equity has become more prevalent, there’s still a large portion of organizations that have yet to actively address the issue.
The “2019 Pay Equity Practices Survey of C-suite and Reward Leaders,” conducted by WorldatWork and Korn Ferry, revealed that while a slight majority (60%) of organizations are addressing pay equity in their workplaces, 28% are still only considering doing the necessary work and 7% said pay equity is not on their company’s radar.
The survey, which was based off 769 responses from WorldatWork members and Korn Ferry contacts, suggests that even when pay equity gaps are uncovered, large organizations are taking a measured path to address them.
While nearly a third (31%) of surveyed organizations agreed that the primary objectives of pay equity programs are to build and maintain a culture of organizational trust, many companies are missing the opportunity to build trust through transparency about their pay equity initiatives.
A majority of those companies engaged in pay equity management activities are sharing their intent and findings with senior leaders (90%) and people managers (65%) but keeping largely mum to the workforce at large.
- 27% report any broad-based communications to employees.
- 52% report communicating findings of the analysis only to employees affected by the adjustment.
“This is a cultural miss,” said Scott Cawood, WorldatWork CEO. “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.”
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 when conducting analyses, the survey found.
- 46% of organizations surveyed said both gender and ethnicity are being considered in pay equity analyses.
- 36% of organizations take additional demographics (e.g., age) into account.
A typical organization treats between 1% and 5% of their employees with a pay equity increase, with an average 5% increase, implying that total impact on payroll typically ranges between 0.1 to 0.3% of total base salaries.
C-Suite and HR Have Different Priorities
Who is driving pay equity management at the organization has significant implications as to the scope, nature and impact of the work.
Typically, the C-suite or HR departments initiate these efforts, but once a pay equity management program is in place, HR drives the process in 77% of companies surveyed, usually with support from the legal team.
“C-suite executives see these initiatives as primarily about building a culture of trust in the organization. Total Rewards leaders see these programs largely about being compliant with a changing regulatory environment,” said Tom McMullen, Korn Ferry senior client partner. “While both are critical objectives, the nature of the project, how this work is conducted, communicated and implemented can vary significantly depending on the group driving the effort.”