Organizations Increasingly Focus on 'Fixing' Pay Equity

By Andrea Ozias, WorldatWork

Sept. 5, 2017 — Pay equity continues to be a contentious topic in the United States, all the way from Capitol Hill to companies and through to individual employees. Compensation professionals may dream of an easy solution, but the reality is that there is no quick fix. It doesn't mean, though, that organizations aren't working on it.

While nearly half (47%) of employers are spending the same amount of time addressing pay equity as they did a year ago, 43% reported that they spend more energy than they did in 2016. This is according to the results of the recent WorldatWork "Quick Survey on U.S. Pay Equity Practices" report.

So, with time, energy and resources being spent at this rate, why isn't more headway being made?

Top 5 Barriers to Pay Equity

1. Expense required to fix inequities (30%)

2. Determining which criteria to evaluate to ensure fairness (16%)

3. Getting leadership buy-in (21%)

4. Navigating regulations (12%)

5. Monitoring discrepancies takes too much effort (4%).

"There are a variety of barriers to establishing pay equity," said Alicia Jenkins, research manager with WorldatWork. "The No. 1 challenge for employers boils down to simple numbers: It's expensive to fix inequities."

Cloud-based software company Salesforce can attest to that: In 2015 the firm undertook an audit of its 17,000 employees' salaries to determine equity between men and women. After its comprehensive review, 6% of Salesforce's employees required a salary adjustment — to the tune of $3 million spent to eliminate differences in pay.

Jenkins was quick to point out, though, that just because it's expensive, that doesn't mean employers aren't addressing it.

"It would be easy to say that companies think establishing equity is expensive so, naturally, they're going to turn a blind eye, but that's not the case," she said. "The simple fact that 90% of respondents said they're either spending the same or more time focused on gender or racial pay equity — or both — means it's top of mind in today's organizations."

Melissa Murdock, public policy expert in WorldatWork's Washington, D.C., office agreed that companies have been increasing their efforts to establish equity, and they're not afraid to be public about it.

In June 2016, the Obama Administration launched its White House Equal Pay Pledge "for private-sector companies that share our commitment to equal pay." At its launch, 28 companies had signed onto the pledge, including giants Amazon, American Airlines, PepsiCo, Johnson & Johnson and the Dow Chemical Company. By December, 44 companies had signed onto the pledge.

Yet, according to the survey results, a sizeable 72% of respondents said they were unaware of whether their company had responded to the pledge.

"I'm not surprised it's not that widely known," Murdock said. "The White House issued the pledge in the middle of 2016, and Trump eliminated it pretty early when he took office. For something like this to really gain any traction, it needed more time to be publicized and promoted."

Even with the pledge's official demise, Murdock said companies, policymakers and employees are still talking about pay equity and what the appropriate solutions might be.

"We are definitely seeing a major shift in strategy from the Obama administration to the Trump administration," Murdock said.

Last week the Office of Management and Budget's (OMB) Office of Information and Regulatory Affairs (OIRA) announced that they would be suspending the Equal Employment Opportunity Commission's new reporting pay and hours worked disclosure requirements on the EEO-1 form. These changes were finalized in an attempt by the Obama administration to collect additional pay data in hopes that this data would help close the gender pay gap.

"The now suspended EEO-1 reporting requirements were extremely controversial and it was never clear how the additional data being collected would help employers address pay equity issues," Murdock said. "This is a complicated issue, where there likely isn't a one-size-fits-all answer that can be legislated down from Washington upon employers.

"I don't expect to see the current White House and Congress pushing aggressively on federal government intervention on pay equity. However, many states and cities are considering and passing policies to try and address unlawful pay disparities. This is an issue I anticipate will be highly debated for many years to come."

Andrea Ozias is director of news and publications for WorldatWork.

Contents © 2017 WorldatWork. For more information, contact the Copyright Department at WorldatWork.

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