Compensation, Employment Law

Equal Pay: 4 Steps to Define Comparable Work in Your Company

If Massachusetts’ new Equal Pay Act legislation is any indication, sweeping changes are coming, and the crux of forthcoming reforms will be determining comparable work and fair compensation. Companies can get a jump on this by defining and examining comparable work within their own organization to mitigate pay gaps and establish a fair work environment.

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Massachusetts’ recent Equal Pay Act legislation signals change on the horizon. Even though 11 other states have pay equity policies, this new reform tightens the rules and revitalizes a long-standing issue. With equal pay back in the spotlight, more states are likely to revise existing regulations or adopt new legislation. To get ahead of the anticipated reforms, Human Resources (HR) directors and leadership teams need to make parity a priority.

The new legislation is focused on closing the pay gap between men and women who do comparable work, which could mean in the same role or in roles that require “substantially similar skill, effort, and responsibility,” as defined by the policy. Establishing that clear definition of comparable work is why the legislation improves on older regulations, and it’s the piece organizations need to heed.

When other states emulate Massachusetts, companies will be required to reorient their pay scales around this idea of comparable work. Because it involves several components and some nuance, figuring out what comparable work means for your company sooner rather than later will save you time, money, and effort.

Comparing Accountants to Oranges

The definition of comparable work goes beyond making sure the female manager’s salary is equal to the male manager’s by attempting to correct salary disparities across different roles, focusing on compensating employees by skills and performance rather than race, gender, or religion. However, this pay gap persists, in part, because of a history of sex-segregated jobs in which “male” jobs typically had higher pay scales. Even in the modern workforce, past pay discrimination still influences salary decisions.

Comparable work is intended to break down ingrained inequities by using skill, effort, and responsibility instead of traditional pay history to determine compensation. It also strips away subjective factors, like favoritism, that create pay inequality. Objective metrics allow HR to compare different roles to determine whether the work is fundamentally equal and whether employees’ pay should be, too.

Recalibrating pay can open opportunities for everyone and create a more fair and desirable workplace. Additionally, existing employees get more fulfillment from their jobs when they believe their salaries are merit-based and their employers are ethical, drawing top talent from across all demographics to your company.

Ultimately, transitioning to a more objective process to determine employee salaries will increase goodwill internally and ensure you are compliant with future regulations. But evaluating comparable work takes time, so prioritizing it now will allow your company to get ahead of reforms and avoid the cost of last-minute changes.

4 Steps to Define Comparable Work for Your Company

The legislation gives companies the responsibility to determine for themselves what comparable work means. This requires an examination of your organization’s roles, pay structure, and people to make sure employees in comparable roles are compensated fairly. The following four steps will help you accomplish that.

1. Use software to determine a baseline.

Before your organization can define comparable work or restructure pay, you need to understand your current workforce. What skills do your customer service representatives possess? What responsibilities does your legal team have? Software provides the easiest way to collect and measure these data.

Find software that allows you to monitor multiple aspects of every employee and role and make comparisons at the job level by gender and other factors. Foundational data provide the starting point to implement a fair work environment, allowing you to see where jobs align and where they differ.

2. Assess current policies.

Once you know the variables, evaluate your existing policies. Consider how your organization defines roles or creates new ones. Is the process based on skills and responsibilities? Does it allow for comparison across different roles to determine appropriate compensation? Is there governance in place to make these decisions? These questions will give you a realistic picture of how your structure (or lack thereof) is creating pay gaps.

3. Create or restructure pay bands.

After assessing your current position, you can make changes based on comparable work. Establishing competency-based job roles and pay bands will help you identify and resolve inequalities, such as managers with different salaries.

First, create detailed job specifications from your data. Use your definition of comparable work, and write specifications so you can easily compare roles to determine which are substantially equal. Then, implement appropriate pay bands, which group jobs into salary ranges by factors such as experience and responsibility rather than historical earnings or what peers make, as pay scales do. Roles with comparable work go in the same pay band.

4. Consider other factors.

There are other pieces to the comparable work puzzle, such as defining and creating policies around work/life balance initiatives. For example, some roles allow employees to work remotely, which should factor into your role comparison, whether it is seen as a perk or an added responsibility. Determine what’s acceptable and expected for each department or role to create clear guidelines and fair policies.

Linda Ginac is the chairman, president, and CEO of TalentGuard. Before TalentGuard, she founded a successful career development franchise, The Ginac Group, serving clients across the United States and Canada since 1999. Before this, Ginac was vice president of product strategy at Cofiniti, where she was instrumental in pioneering the company’s global entry into collaborative financial planning using cloud-based technology and preparing the company for a successful exit.

Ginac also served as marketing executive at pcOrder, where she collaborated with the team that led the company from a start-up to a NASDAQ-listed public corporation. In prior leadership roles, Ginac served as vice president of marketing at EPSIAA, where she led global expansion of the brand through acquisition by Fiserv; as vice president of business development at Computer People; and in numerous leadership roles at Digital Equipment Corporation.