Wealth inequality ‘potentially the new frontier of pay equity’, says Payscale’s Ruth Thomas

Reward professionals should consider how their pay budgets are distributed across their organisations

Employers should prepare for wealth inequality across their organisations, Ruth Thomas, Chief Product Evangelist at Payscale, told the Top pay and reward trends and challenges going into 2024 REBA webinar on 6 December 2023. “One of my predictions is that the whole topic of wealth inequality will potentially be the new frontier of pay equity,” she said.

This means considering the distribution of pay across the organisation. “We’ve seen some organisations tackling that, particularly within the retail sector where companies have looked at the allocation of pay budgets and allocated a greater portion down the pay scale and more senior executives haven’t got pay increases,” Thomas added.

A poll conducted during the webinar found that 20% of attendees say the April 2024 rise in the National Minimum Wage to £11.44 an hour will have a big impact on their pay budget. A similar proportion (19%) said the effect would be moderate. “The challenge for all of us managing compensation is how to maintain the talent franchise at the same time as controlling cost,” Thomas said.

She suggested thinking beyond traditional approaches to pay budgets, particularly given greater employee expectations and the environmental, sustainability and governance agenda. “It’s always thinking about pay differentiation within your organisation and making sure that you're really paying for the desired outcomes that you need. If you’re going into your pay reviews, it’s something you need to make sure that you’re focusing on.

Thomas also highlighted early findings from Payscale’s Compensation Best Practice report, considered the largest global compensation survey, which suggest retention and engagement are at the top of the reward to-do list for 2024. “That’s no surprise given the macro-economic climate we have,” she added.