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Moving Past the Numbers in Pay Equity

There’s a lot of statistics surrounding the topic of pay equity and often the one that is presented in the news — that women earn 80 cents for every dollar a man earns — forms an incomplete picture. To arm your organization with the best tools to achieve true pay equity, you must dig deeper into the data and then go beyond it.

Pay Equity

This was the focus of “Pay Equity — Moving Past the Numbers,” presented by Carrie Belter, principal at Korn Ferry, and Malinda Riley, senior principal at Korn Ferry, to kick off day two at WorldatWork 2019 Pay Equity Symposium in Philadelphia.

While the “80 cents for every dollar” statistic is technically accurate, Belter acknowledged, it doesn’t account for things like seniority or function, which can drive differences in pay, she said.

“This is presented as a gender discrimination issue, but it’s really a female representation case,” Belter said.

When you drill down into the number, based on Korn Ferry research, the gap shrinks. While their research indicated it’s a 23% difference in pay between males in females across organizations, that decreases to 8% when comparing at the same job level. When comparing salaries for men and women at the same job level in the same company, it drops to 3%. Further, when comparing average salaries for men and women at the same job level in the same company and in the same function, the difference is 1%.

The global statistics mirror that same trend, Belter noted.

By understanding these deeper statistics, it will better inform you and your organization before proceeding with pay equity analyses, Riley said. Belter and Riley explained that pay equity pushes within organizations are driven by three different categories:

  • Regulatory pressure.
  • Societal expectations.
  • Organizational performance.

Korn Ferry’s research indicates that if employers aren’t managing pay equity well, there’s an increased risk of litigation, reduced employee engagement and loss of key talent, shareholder disapproval, lack of trust in organizational leadership and, ultimately, sub-optimal performance.

To manage pay equity issues well, employers must have the proper procedures in place. Belter and Riley broke that process down into five phases:

  1. Establish parameters;
  2. Quantify gaps;
  3. Understand drivers;
  4. Action planning; and
  5. Lead change.

This can come in different forms. Riley referenced a client that had a male-dominated workforce and found structural differences in their pay. “It opened up their eyes to bigger issues that they need to address.” As a result, she said, they’ve been going about their recruiting process in a different way.

“They do a lot of on-campus recruiting, so they’re evaluating how to go about that in a different way,” she said. “They’re thinking about new academic partners to enhance their pipeline of female and more diverse candidates. Thinking about leadership development and evaluating what obstacles exist to prevent females from reaching the top levels of the organization.”

These are the kinds of actions needed to achieve a more equitable workplace, which goes beyond just the raw pay equity statistics. Belter said it’s important have both structural and behavioral inclusion as a part of your overall strategy

“Behavioral is a different kind of challenge, because we’re really talking about changing how we behave and that’s not easy,” Belter said.

When it comes to structural inclusion, equality and equity are both essential elements, but they are different concepts, they explained.

Equality has rules of the game and the same principles apply to everyone. Additionally, formal and non-discriminatory policies and practices are in place and the organization operates under the meritocracy principle.

Equity, on the other hand, means everyone has access to the game and there’s an acknowledgement of an unequal starting place for some. There are informal, invisible and implicit headwinds that exist that may provide an unfair advantage to some. Thus, the organization operates under the “systemic biases” principle, meaning you need to level the playing field to ensure fairness.

Belter said organizational headwinds refers to organizations getting used to who has traditionally been in power, which in most cases is men, and then favoring that setup because it fits. This can create a negative domino effect that perpetuates throughout an organization.

“A stereotype can cause us to think something exists for one gender,” Belter said. “And we start making policies and practices because of it before fully evaluating what actually might be going on.”

Belter and Riley provided examples of common mistakes organizations make when trying to fix bias or pay equity issues, which included using metrics that are too narrow, implementing initiatives too quickly and treating everyone the same.

“It’s about treating folks in a way that will unleash their potential and highlight their talent,” Riley said.

Ultimately, Belter and Riley concluded that most senior leadership is on board with creating more diverse, inclusive and equitable workplaces, which is how change occurs. But they asserted that it’s important to utilize best practices and constant communication, because ultimately, it’s an imperfect process that will require plenty of adapting and evolving.

“No organization that I’m aware of gets it right the first time,” Belter said. “So those feedback loops within the organization are critical for when you need to pivot.”

The Evolving Regulatory Landscape

The second session of the day was presented by Consuela Pinto, shareholder at Fortney Scott, and Mickey Silberman, shareholder and chair of Fortney Scott’s pay equity practice group.

Pinto and Silberman provided attendees with a comprehensive breakdown of the current legal and regulatory landscape when it comes to pay equity and explored the ways it’s poised to change in the coming months and years.

They noted that there will likely be a rise in pay discrimination lawsuits in the next five years, not because organizations are doing a worse job with their pay equity practices, but because there is heightened awareness around the issue and increased regulations and ramped up enforcement by the Department of Labor, Equal Employment Opportunity Commission and the Office of Federal Contract Compliance Programs, as well as many states and foreign countries.

After the Equal Pay Act of 1963, there’s was some narrowing of the gender pay gap but that gap has hit a plateau, the presenters explained. It has not moved much in the past 30 years.

“What’s happened over the last five to 10 years is a deliberate effort to develop new tools to ‘attack the gap’.” Silberman said. “The enforcement agencies and many states have been incredibly active to force this issue.”

Pinto and Silberman discussed the rise in salary history bans that are taking place across the United States and how employers should approach the topic of pay history in their job offers.

In addition to discussing the intricacies of the Equal Pay Act and other various state laws that employers must comply with, Pinto and Silberman emphasized the importance for employers to exercise attorney-client privilege when conducting pay equity analyses to protect the results of the analyses from disclosure during litigation and agency enforcement actions.

About the Author

Brett Christie is a staff writer at WorldatWork.

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