Most employers working toward pay equity, survey finds

Dive Brief:

Only 60% of employers are actively working to achieve pay equity, according to the 2019 Pay Equity Practices Survey of C-suite and Reward Leaders conducted by WorldatWork and Korn Ferry. However, 7% said that pay equity is not on their radar at all.
For employers that have identified pay gaps, 23% are considering remediation strategies but have not implemented them yet, while 28% haven't started the process at all, the report said. Though the C-suite and HR tend to initiate pay equity efforts, implementation is driven by HR (usually with help from legal) at 77% of the the organizations surveyed.
The report also found that employers consider pay gaps beyond the gender pay gap. About half of respondents said they consider both gender and ethnicity in pay equity analyses, while 36% take additional demographics, such as age, into account. Despite this inclusion, transparency in messaging is usually limited, with only 27% of respondents communicating broadly with employees about pay equity initiatives. About half of employers surveyed said they only communicate their pay equity findings to those affected.

Dive Insight:

Employers feel a lot of pressure when it comes to pay equity, pay transparency and inclusivity — and not without justification. ADP recently reported that women's base salaries are 17% lower than men's, on average. This figure rose to an average of 19% with the inclusion of incentive pay.

Pay transparency may initially be an easier issue to remedy than pay equity, and employers have made recent strides on this front. According to the 2018 Willis Towers Watson survey, 53% of employers reported that they planned to make their pay decisions more transparent within the next three years, along with revising annual incentives, boosting base pay, increasing the use of technology in making pay decisions and implementing recognition programs.

Experts speaking at the National Employment Law Institute's (NELI) 42nd annual Employment Law Update recommended that employers should imminently consider conducting a pay audit, given the internal and external pressures employers face to address and correct pay gaps. However, employers' pay analyses should be narrowly focused on certain periods of time and roles, cautioned Eric Reicin, vice president, general counsel and corporate secretary for MorganFranklin Inc., who spoke as part of a pay equity panel at the American Bar Association Section of Labor and Employment Law's 2018 annual conference.

Initial questions employers need to consider, according to the NELI speakers, include whether the audit will be privileged in the event of future litigation; what data already exists; which positions will be compared; and what compensation will be studied. For example, will only base pay be examined or will bonuses be examined as well?