Compensation, Compensation Administration, Compensation Planning, HR Management

Seven Pay Equity Questions Every HR Professional Should Ask

In part 1 of this article we explored problems with pay equity and discussed an approach for getting pay equity right. Today we’ll provide you with 7 questions that every HR professional should ask about pay equity.

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Seven Questions Every HR Professional Concerned About Pay Equity Should Ask:

  1. Did the company conduct a pay equity analysis this year? If not, is that because pay fairness is not a priority? Is it not prioritized due to fear of finding a problem or for some other reason? Is that reason acceptable?
  2. Does the pay equity solution comply with the organization’s data security and data privacy policies and best practices? For instance, data and analysis should not be stored on local machines or drives outside of the organization’s control.
  3. Are the results updatable so that you can refresh the data at any time? Can you easily update and rerun groupings to assess risk in different possible ways?
  4. Are the results presented in a way that is usable for you to take action? Could you easily make changes to groups or identify individuals who need specific attention (noneconomic solutions)?
  5. If compensation changes were made as a result, what did you learn about the underlying problems that led to the disparities? What policy or behavioral changes will be made? Did you address the root causes or just symptoms?
  6. Are all compensation events analyzed? This includes base pay, new hire starting pay, stock grants, midyear changes, bonuses, reorganizations, or releveling exercises, and the like.
  7. Does the company analyze pay during the pay-setting cycle so that changes can be made before pay is finalized? Does the pay equity solution enable imposition of pay equity discipline for new hires, promotions, and transfers?

Once you have the answers to these questions, you will be able to assess risk and evaluate the company’s commitment to pay equity. Most organizations engage in ongoing changes in the employee life cycle, including hiring, setting pay, promotions, terminations and turnover, and reorganizations. Companies not analyzing pay equity, or doing it just once per year, are incurring unnecessary risk—and doing so at a time when third parties are becoming dramatically more sophisticated in pressing organizations to demonstrate pay equity results.

The most important element of employee satisfaction, engagement, and overall commitment to work is fair pay. A company genuinely committed to pay equity is not only doing the right thing; it also has an incredible opportunity for brand marketing and public relations, as well as for being a differentiator for recruiting and retaining top talent.

Zev J. Eigen is the Founder and Chief Data Scientist at Syndio.