The five essential actions that all employers must take to address pay gaps and equality
Equality across the whole of society has myriad benefits. You will struggle to find anyone within HR who would not support a business case for more equality!
In fact, while above average pay and benefits have minimal impact on business outcomes, there is growing evidence that shows making rewards and recognition fair and equitable has far wider positive impacts.
Pay gaps are a challenge that HR is having to face every day. There are more and more stories in the media of employers being careless or even unaware of their existing pay gaps. Though the scale of the challenge varies significantly by industry sector, and historical approaches to pay strategy etc., all employers have one challenge in common: nothing can be improved without accessible, accurate and consistent data.
Some countries are now ensuring legislation is used to force organisations to act on pay gaps and equality, although in most countries it remains a voluntary endeavour. Both voluntary and non-voluntary reporting numbers will continue to grow, but it is inevitable that more developed countries will move towards mandatory reporting.
Organisations are quickly having to face this challenge head on. Here we address five actions that organisations can prioritise to help address pay gaps and equality in their business. This is not an exhaustive list but does provide some real-world approaches that can be actioned right away.
1. Data. Automate the process of gathering and normalising data to achieve consistency across your data sets. Think of ways to consolidate all of the employee data you need into one central, indexed repository. This will help speed up the gathering of data and ensure complete coverage across all reward categories (beyond statutory items).
Automating the process will reduce the manual effort required, which means the risk of errors and inaccuracies are lowered. Remember that, once gathered, static data goes quickly out of date, and so organisations should ensure the repository is real-time where possible.
2. Repeatable. Ensure it is a repeatable exercise with consistently structured and indexed data. There is nothing more frustrating than gathering and analysing all that data this year with a manual process, complex spreadsheets and custom reports, to then have to do it all again next year. Automation also allows straightforward communication with stakeholders as there will be consistent findings identified and messages that apply.
3. Agile. Start simply but set a high bar. Start with your simplest, but most impactful countries. Learn first, create the playbook of best practices, then expand out and grow. Reward is the last remaining business function to not be fully digitised. Set the bar high by aiming for all countries beyond statutory requirements. Once proved in a handful of countries, there is no reason why you cannot aim to ensure all your territories are included and monitored. While there may not be a legislative requirement to submit ratios (yet), it will allow you as an employer to ensure you meet your environmental, social and corporate governance (ESG) requirements and strengthen your brand as a responsible employer.
4. Monitor, monitor, monitor using real-time data dashboards. This way you can spot early where you might have issues. Regular and constant data is a powerful driver of behavioural change, while consistent measurement is just as important as constant measurement. If businesses consider the Hawthorne effect, where behaviour changes as a result of being observed, organic positive changes can happen over a period of time. Measuring that and then taking action becomes far more straightforward. Keep in mind how people improve their fitness or energy consumption by adopting Fitbit or Smart Meter technology.
5. Embed. Checks should be embedded within your business processes. When a job changes, impact skews should be checked (i.e. during recruiting, promoting, mobility, pay reviews, etc). Before making changes at an individual level, ensure it will not produce undesirable skews in equality and pay gaps. Consider using technology to model ‘what-if’ scenarios before making that change. If you do not, and it causes a sub-optimal skew, you will have to even it up somewhere else using manual processes. This at a large scale will become problematic further down the line.
In addition to these practical steps, organisations must always remember that vast cultural differences across regions and countries exist. This can lead to varied approaches both philosophically and legally. The wider the geographical spread, the more disparate the approaches may be. This, more than anything, is why underpinning the process with a consistently indexed global database, that normalises across all datasets, is the key to successful monitoring and reporting of pay gaps.
As a final thought, it is important to remember that these five actions will not solve the challenge on their own. The business needs to decide what type of organisation it wants to be, what culture it intends to foster, and the appetite for creating change and significant shifts of priority. If they want to be seen as an employer of choice, they need to analyse across more than just pay. According to this recent Harvard Business Review article, organisations should ensure they analyse representation within the organisational chart, monitor development/promotion opportunities, understand retention rates, spot hiring trends, and review job satisfaction. All of these can be the true underlying cause of the pay gaps.
It is a fascinating time in this space and total rewards technology is at the steering wheel!
The author is Jonathan Best, total rewards technologist and enterprise SaaS sales lead at uFlexReward.
This article is provided by uFlexReward.
In partnership with uFlexReward
uFlexReward is an HR Technology spin out from Unilever HR and the first of its kind.
