Dive Brief:
- As pay equity and compliance initiatives take hold globally, the volume of overlapping federal, state and local legislation threatens to make compliance more difficult instead of less burdensome, according to a new survey-based report by Harvard Business Review Analytic Services and Trusaic.
- The report cites pay equity audits (PEAs) as a valuable analytical tool for employers that can explain differences in pay levels across an organization. In survey highlights, 86% of U.K. respondents conducted PEAs, compared with 77% of U.S. respondents.
- For U.S. employers, pay reporting requirements (such as those levied by the U.S. Equal Employment Opportunity Commission) were the biggest motivator for conducting PEAs. For U.K.-based companies, the motivating factor with the most significance was pressure from hiring and retention.
Dive Insight:
Although survey respondents called out pressure from reporting requirements and hiring and retention as top motivators for conducting pay audits, another factor is pushing companies to take a look at their pay practices: social pressure. "We are in a new age in which there is intense pressure on companies, both internally and externally, to address pay gaps," Zina Deldar, corporate counsel at Affirm, Inc., told attendees at an August 2018 event.
As the Harvard Business Review Analytic Services report revealed, many companies are taking action in this area. Sixty percent of employers are working to achieve pay equity, according to a WorldatWork and Korn Ferry report released in May. Several household names have declared success in their efforts, as well. Nordstrom, for example, said it reached 100% pay equity across gender and race in August. Match Group, the owner of OkCupid and Tinder, said in December 2018 that an audit confirmed it achieved 100% pay equity.
For employers motivated to ensure their pay practices are equitable, an audit may reveal where they need to improve. To begin an audit, employers will need to make a plan to ensure the audit and its results are accurate, effective and privileged, Deldar and co-presenter Quenton Wright, principal at Charles Rivers Associates, said.
It's worth noting employers can audit other areas where they want to ensure compliance, too.
