Pay equity is the idea that people should be compensated the same for doing equivalent work—assuming they have the same level of experience. While this sounds like an incredibly straightforward idea, it’s still not something that truly exists in the United States or much of the world.
The most common forms of pay discrimination occur based on racial and gender lines. The combination of these two makes the level of disparity even worse. For instance, Hispanic and Latino women on average make more than $1.1 million less over the course of a 40-year career doing the same work as a white male, according to data from the Center for American Progress.
This is an absurd pay gap that can’t be explained away by rounding errors. Furthermore, these numbers don’t even consider the level of potential wealth lost from being unable to save or invest money when almost all income must go toward paying essential needs. All these factors taken together help explain why pay equity matters now.
Why Pay Equity Matters Now
There are several reasons why pay equity matters now. The most obvious of these is clearly the ethical concerns that come along with it. It’s impossible to truly justify the underlying reality of pay discrepancies. But the importance of pay equity runs deeper than this, especially for enterprises that may or may not need to address some of these issues with their own operations. These are a few of the other top reasons why pay equity matters so much right now:
- It creates a stronger workforce – There are several ways pay equity can create a stronger workforce and workplace culture. It all starts at the heart of building the best employee base. People who work at your enterprise aren’t going to stick around if they feel they can be better compensated elsewhere. This is especially true for top performers, who will have no trouble landing work at another firm that will pay them the right amount. As diversity and talent leave, it will also create a complacent culture devoid of the comradery and competitiveness required to operate a successful organization today. Those that fail here won’t be able to adapt to the ever-evolving marketplace.
- This isn’t something that can be ignored – Whether it’s stakeholders, employees, or outside activists, people are going to notice if you’re discriminating against certain employees. In our world of data and accountability, an increasing number of people and businesses will avoid brands that don’t live up to pay equity standards.
- You can be held liable – Enterprises can be sued if they’re found guilty of pay equity violations. This is becoming a commonplace occurrence, where many organizations have had to pay out substantial sums as a result. Conducting pay equity audits is one way to help identify pay gaps so they can be remedied before it reaches this point.
Without a doubt, pay equity is a crucial consideration for organizations today. But how should they go about implementing policies?
How Should Your Organization Address Pay Equity?
There’s no question pay equity issues need to be identified and rectified if they exist inside an enterprise. It can be difficult, however, to go through the process of finding and solving them in a transparent and true way. Companies that think they’re doing a great job on pay equity are often more at risk of failing, as they can lose focus and allow things to revert without realizing it.
Bringing on a pay equity consulting firm to assist with analysis and remediation can be one of the best strategies. A great consulting partner will have the data analytics tools to identify various pay equity issues within your compensation structure and show you how to fix them. Working with a trust firm with diverse experience will be key for international enterprises that have to navigate the rules and regulations of each place in which they have operations.
No matter what, auditing your pay equity status and creating a plan for remediation are essential for organizations today. Pay equity matters and every enterprise needs to find solutions for any violations.