6 changes towards achieving pay equity at your organization
Updated: Sep 28, 2022
In our latest Salary Snapshot, we focused on Marketing leaders in the tech industry and found an alarming pay gap between male and female leaders. It sparked the following list of actionable tips towards achieving pay equity at your organization.
The World Economic Forum predicts that it will take 268 years (no, not a typo) to close the economic gender gap, based on data trends from post-WWII to 2021. This is 268 years too long. Many put the onus on the underpaid individuals for driving change, with flawed advice to simply “ask for more” and “know your worth”. While effort at the individual level should not be discredited, real change must come from employers.
If you are reading this and are in a position to influence hiring at your organization, please take a moment to review some of the best practices below towards achieving pay equity.
Lead with your best offer
This goes against the principles of negotiation. But listen closely. This isn’t about getting the best possible deal on a used car - we’re talking about paying someone fairly for the role you are hiring for, and based on the candidate's own unique merits.
We talk about this in detail in an article we published in 2019, but the here is the tl;dr:
Candidates who negotiate for more money during the hiring process generally will receive an offer above the initial - sometimes substantially higher. Many companies build this into their process proactively by making offers at the low end of the range, allowing room for negotiation. But consider that, statistically, women are far less likely to negotiate their offers. So from the very beginning, allowing for negotiation (not likely a skill you specifically want to pay for!), you are starting with a built-in gap. This compounds negatively over time as employees are offered raises and bonuses as a percentage of their original salary. And so the gap widens.
By putting your best offer forward every time, you won’t compromise fiscal responsibility but will be on the road to growing a company built on equity, with employees who are valued for their most meaningful skills and contributions.
Forget about the past
When determining salary requirements early in the hiring process, employers often ask candidates about their salary history, and then use this as the basis for an offer. Do this and you simply adopt the biases and pay gaps of the candidate's previous company. If a female candidate was underpaid at their previous employer, you will be importing this pay inequity.
Collecting this data point can give you general market insight, but resist using it to establish an anchor point for offers and negotiations, which we strongly believe to be one of the catalysts for pay inequity. You are hiring for a specific role in your business, you need to understand the market rates, then set a salary range for the job with variability for the unique skills of each candidate. Offer what the individual is worth to you and what will keep them engaged and happy in the role for the long term.
Audit your compensation data
Don’t be like the 61% of companies in Canada that turn a blind eye to inequities hiding in your pay policies and compensation data. There is a gap between intention and action when it comes to corporate commitment to inclusion, diversity and equity best practices. Auditing salary data is an important first step to identifying inequities. In the wise words of Freezepop, less talk more rock.
Auditing salary data goes beyond base salaries; it’s important to examine all elements of the rewards system, including promotion rates, equity allocation, bonuses and gender ratios at all management levels.
Promote trust and accountability with pay transparency
If your organization is serious about achieving pay equity, then pay transparency is a key to get there. Pay transparency provides clear goals for employees to work towards, it holds organizations accountable for closing the wage gap, and it will make your company more attractive to job seekers.
The Ontario government was close to mandating pay transparency for organizations with over 250 employees, until the bill was put on indefinite hold by a new administration. But businesses of all sizes should not wait for transparency to be legislated. If you are serious about equity, your data and your efforts to improve your results should be visible to your own team, and ideally to the world. Without some degree of transparency on compensation and without encouraging open conversations on the subject, change will never happen.
Create a competency-based compensation system
A competency-based comp system may sound like a utopian dream. HR teams are stretched and supply and demand for talent is a driving factor that has resulted in job offers that defy reason for the sake of short term gains. But this is one of the only ways to truly remove bias in the pay system.
Bias is so entrenched into being human, that many would argue that we can never truly achieve a perspective or a pay structure, that is without inequity. So it is critically important to have carefully constructed systems in place that serve as objective roadmaps for decision-making.
Competency-based comp systems are designed to remove bias and ambiguities in how people are paid at your organization. Salary ranges should be driven by data, and should reflect the agreed-upon value assigned to different skills, experiences, and outcomes, with the market realities taken into account. They should not be based on who the incumbent is as a person.
Take flexibility seriously
Don’t be startled by this point: Discrimination is not the main culprit behind pay inequity; systemic inflexibility is. Discrimination is a factor for sure, but pay inequity is moreso the result of a tangled system that ultimately makes it far more difficult for women to advance in their careers than men.
The following is an extreme oversimplification, but the jist is this: The ‘invisible labour’ of taking care of a household often unfairly falls to women, along with who takes time off when children arrive, and also the mental load that comes with this. The “motherhood penalty” puts women at a disadvantage when it comes to earning promotions and subsequently higher compensation. But it doesn’t have to be this way.
One of the antidotes to this is intentional flexibility. Flexibility is not a frivolous start-up benefit like midday goat yoga (although if that’s what matters to you then fill your boots). It should be taken seriously, respected and diligently managed.
Provide employees with the opportunity to attend to life events without being penalized. Put into place family-friendly policies that support mothers and fathers on leave AND on return to work. Empower employees to manage their own work schedule whenever possible. These are just a few steps you can take towards flexibility that will enable your female employees to thrive and will help you achieve workplace equity.
The realities of working hours (how many and when) are at the root of many pay discrepancies between men and women. For women, these ‘choices’ often come from a place of necessity rather than preference or ambition. Encouraging and supporting flexible schedules gives back that true power of choice to women, and creates the conditions that allow them to do their best work.
On an uneven playing field, women around the world are breaking down barriers and accomplishing extraordinary things. Imagine what can be done if we help to level the field. Challenge your organization to flip the script and deliver fair offers, ignore salary history, audit comp data, provide transparency, develop competency-based comp bands and create a flexible environment. We’re excited to see what happens.
* Shameless plug - Artemis Canada is a fully flexible workplace that just landed on the Globe & Mail’s list of Top Growing Companies for the 2nd straight year.
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