Navigating the Pay Gap: How to Close Gender/Minority Wage Disparities in Your Organization
First, the bad news. Recent studies show the gender gap between wages earned by men and women remains a serious issue throughout the economy. In 2000, women earned only 76 percent of what men did for similar work, according to the US Bureau of Labor Statistics. Over the past two decades, despite intense focus on this issue from the media and pay equity advocates, women still make just 83.7 of what men make in similar jobs. And the disparities are even larger for women of color and those with physical disabilities.
So much for progress.
Now, the good news. If there’s a pay gap at your company, there’s something you can do about it. And closing this gap will likely be good for your business! That’s because companies prioritizing pay fairness and inclusion are not just doing the right thing. They also tend to outperform competitors. Pay equity and transparency has been proven to increase employee engagement, drive innovation, and improve retention. In fact, pay fairness is often a stronger driver of employee motivation than higher pay.
So how do you achieve pay equity at your place of business? Here are 10 ways to close your pay gap:
1. Own Up to It.
The first step in any recovery program is to admit you have a problem. Or at least that you may have one. If you deny pay inequities may exist in your organization—or worse yet, that pay inequity isn’t an issue worth addressing—then you will never be able to fix it. And if you don’t fix it, you will be putting your company at a competitive disadvantage. So, step one is to make a commitment to seriously study the issue as it exists in your business. Who knows, once you do, the answer may prove to be a pleasant surprise.
2. Find Safety in Numbers.
The great thing about the pay equity issue is that it’s quantifiable. It’s a matter of numbers, not judgments or opinions. It’s objective. So, to examine the issue in your company, you want to gather as much hard data as you can. Analyze your compensation structure, comparing pay levels across genders and ethnicities for similar roles and responsibilities. The more hard numbers you produce, the clearer a picture you will construct.
3. Run an Audit.
Once you have the numbers, use them to determine the actual state of your employee remuneration system. Such an audit should be comprehensive, examining factors such as job level, experience, and performance. It should also be an annual affair. Regular, periodic examinations of your company’s pay structure can prevent you from sliding back into old habits.
4. Commit to Equal Pay for Equal Work.
“Equal pay for equal work” is a concept with which most people agree. But determining what “equal work” means is not so universal. Even between two people with identical job titles, the roles and responsibilities can differ. To address this problem, your company should establish clear, objective criteria for evaluating job roles, responsibilities, and skills required. This can ensure pay decisions are based on merit and experience, not personal preconceptions and biases.
5. Practice Pay Transparency
This is an issue I’ve written about a lot. In the past, it was often not only considered bad manners to discuss one’s remuneration but, in some companies, doing so was grounds for dismissal. Today, not only is pay transparency considered a best business practice but, in California, it’s the law for companies with 15 or more employees to advertise salary ranges when posting jobs and to share salary range info when employees ask for their own range. But this is a good thing. When workers understand how pay decisions are made, they are likelier to believe in the fairness of the system. Transparency also helps in identifying and rectifying pay discrepancies.
6. Provide Equal Advancement Opportunities
We’ve all heard terms like “glass ceiling” to describe the limits women have for moving up in the workplace. Beyond equal pay, equal advancement opportunities are essential for your company to be viewed as a free and fair employment place. This means ensuring special training and promotions are offered fairly to everyone, regardless of gender, ethnicity, or other social factors. Promote a culture that values and rewards talent, skill, and creativity, not just formal education, one’s alma mater, or personal relationships.
7. Welcome Employee Feedback
Employees are often the first to suspect pay disparities within an organization, even if they’re unintentional. This can lead to distrust and paranoia amongst staff, which is never a positive. To get ahead of this problem, encourage open and candid conversations about compensation policies among personnel at all levels. Create channels for employees to provide feedback and express concerns without fear of retaliation.
8. Set Goals and a Timeline
In business, the acronym SMART stands for Specific, Measurable, Achievable, Relevant and Time-bound. Adopt this approach to your pay equity initiative. Should your audit reveal disparities, you want to set specific, achievable goals for correcting the situation, then give yourself a deadline for doing so. You also must confer with qualified employment counsel before making changes to pay based upon your pay audit. And hold yourself accountable for progress. Communicate these SMART goals to all members of your organization to demonstrate your commitment to fairness.
9. Benchmark Against Industry Standards
Comparing your organization's pay practices to industry standards can be eye-opening. It helps identify whether your pay disparities are unique to your company or part of a larger sector problem. Benchmarking can also guide your efforts to stay competitive in terms of compensation while maintaining fairness.
10. Seek Legal and Expert Advice
Lastly, consult legal and HR experts to ensure compliance with pay equity laws and regulations. They can provide guidance on best practices and help navigate potential legal challenges. Moreover, proactively seeking advice demonstrates a commitment to legality and fairness.
Conover Consulting has been helping companies with compensation and culture issues for decades. We are more than qualified to help pilot you through this often harrowing maze of statutes, regulations, and best practices. For more information on how we can help you close the pay gap at your company, please contact me at laura@conoverconsulting.com.