According to a recent Beqom study, there is 70% of Generation Z employees who would be willing to change jobs to be in one with greater transparency and pay equity. For this reason, it is important that companies promote solid policies and practices based on correct salary equality, which implies a holistic vision of the organization but that will allow the retention and motivation of good talents, and therefore, will be reflected in the organizational culture.
But, What does pay equity mean today?
We have seen that during the last decades the wage gap has been reduced, but this is still a problem for many. According to data from the ADP Research Institute®, women are still less likely than men to receive a pay raise or bonus for taking on an additional job or changing roles, while non-white employees lag even further behind, and experts warn it could take another 25 years to close the pay gap between demographic groups.
While each organization has to do its part to address this inequity, how each one addresses it is of real importance. For example, business leaders must know that the new remuneration policies must apply to everyone and not only to new members, since they must also win back employees who have been part of the company for longer.
Salary cap policies, for example, can create inequity. “If you limit the amount of salary increase employees can get when they get bonuses or compensation without any margin of discretion, you can end up punishing those who stay longer with your company and move up the ranks. Whereas, if there are women who tend to stay longer than men, this could mean that dedicated female employees end up being paid less than men who are newer to their company and are not subject to the same limits when negotiating their starting salary.” , it states Helena AlmeidaVP Counsel for ADP.
Closing racial and gender pay gaps
Pay equity begins and ends with the collection of different data, because all leaders who make compensation decisions need access to it to understand how to achieve pay equity in their organization and assess progress.
“Data is everything. HR and payroll data, employee salaries, bonuses, demographics, tenure, and performance data, is packed into robust pay data analytics. Accurate data and easily accessible are essential for an analysis and also compare those who are doing similar work throughout an organization”points Ellen FeneyVice President and Deputy General Counsel of ADP.
Analyzing HR data within an organization is how business leaders can check if their impact aligns with their intent. Only then can it be seen how seemingly neutral compensation policies can affect the workforce. “Leaders who influence compensation need to have a complete picture of their metrics,” adds Almeida.
New challenges in the current labor landscape
The global health crisis may have created new challenges for employers fighting for pay equity. With the rapid rise of remote work, leaders may find it more difficult to keep track of where their employees work and therefore what legal and regulatory requirements apply.
However, regulatory standards vary by location, with subtle differences from state to state and even at the local level, due to new rules and reporting requirements appearing each year, giving organizations a moving target for compliance. . All of this means that leaders must prioritize knowing where employees are and understanding what is legally required at each location. This multiplies the challenges and potential ramifications if you fail to comply with pay equity regulations.
The future of pay equity
Currently there is a growing movement around the support and demand for salary transparency, in all areas. In some places, employers are required by law to include salary ranges in job postings, and other states and cities are considering similar legislation. This trend aligns with growing demands from job seekers to assess potential salary even before applying for a job, which could help improve candidate engagement and possibly reduce candidate phantom by allowing applicants to of employment remove that major hurdle before committing to a potential employer.
Pay transparency is also important for today’s workforce. “Employees are now looking at those job openings as well and beginning to appreciate that they are entitled to certain salary information, particularly in terms of the salary range for the position and their company,” Almeida said. All of this gives employees bargaining power and leverage because it helps people negotiate higher wages. This is just another way that employees and candidates really have an advantage in terms of negotiating the best deal for their new job and their current jobs.
Source: Ambito
