Equalizing Pay

Ensuring purposeful practices, policies and processes in establishing fairness in pay.

August 2021

Leena Rai, Transformance Consulting

Ensuring equitable and fair pay in today’s workplace centers on the purposeful practice undertaken to eliminate gender-based wage inequities and pay discrimination. However, understanding, evaluating, and correcting wage inequities requires a concerted focus on both pay equality and pay equity.

While pay equality is based on the idea that equal work should result in equal pay, pay equity goes deeper into the reasons behind why people are paid differently in the first place. While it may be easy to explain away the pay gap between men and women by comparing the jobs that each gender chooses, pay equity explores the reasons why men may be more likely to go into certain occupations, and why women may choose more flexible career options. Pay equity also considers multiple factors that affect the pay gap between different races, abled and disabled people, and other identities. Subsequently, rather than simply looking at the disparity in earnings between people of different genders or ethnicities, pay equity explores the systemic issues, conscious or unconscious biases, social norms, educational opportunities, and wealth that may negatively impact women, people of color, or people with other marginalized identities.

Operationally, pay equity analysis further seeks to realign and restructure pay systems so that compensation practices, philosophies, policies, and protocols may be assessed, and analyzed based upon the criteria of comparable of expertise, qualifications, skills, knowledge, and competencies. This evaluative analysis goes beyond the standard test and premise of “equal pay for equal work”. Rather, pay equity analysis establishes protocols for policy and practices that will standardize, normalize, and systematize pay fairness.

At its most fundamental level, therefore, conducting a pay equity audit involves comparing the pay of employees doing “like for like” work in an organization (accounting for reasonable differentials, such as work experience, credentials, and job performance), and investigating the causes of any pay differences that cannot be validly and appropriately justified.

The Pay Equity Study Methodology

When investigating wage inequities, three key methodologies are utilized: job evaluation, task factor points analysis and a pay equity systemic audit. Each phase of this investigative methodology allows for a deeper level of analysis and evaluation into both the occurrence and the inherent causes of wage irregularities and imbalances. The collected data is then evaluated from two perspectives:

Intra-Classification Analysis: We examine male/female dominated job families: evaluation of positions traditionally held by men and those by women. Points are given for factors, such as: level of authority, decision-making discretion, reporting relationships, specialized knowledge or certifications required. In this analysis, as in the table below, delivery drivers may have the same factor rating as an administrative assistant, despite having different tasks and responsibilities.

Inter-Classification Analysis: We examine male/female incumbents within the same job classification in the job evaluation study, every job is evaluated and given points according to the level of skills, competencies, knowledge, and the level of responsibility required to do the job. We then evaluate whether or not men and women incumbents are paid the same for the same level of skills, knowledge, and competencies.

The Pay Equity Analysis and Conducting Pay Equity Analysis and Audit

Structured pay equity analysis focuses squarely not only in ensuring compliance with internal equity-centered mandates with California’s Equal Pay Act but in the determined review of all organizational compensation processes and policies to ensure alliance with equity practices.

Fairness in compensation, thus begins with both comprehensive pay analysis and an audit of internal pay processes, practices and protocols. Essential, as well is that existing job descriptions, classification and job family frameworks, reporting relationships and internal equity arrangements are examined and evaluated as elements of an organization’s comprehensive capacity optimization strategy. In this effort, a well-defined approach must involve:

Review of current compensation plan and the investigative analysis of any pay inequity, imbalance, and biased practices within the context of race, gender, and related aspects to ensure:

• Skill-based, competency-linked pay policies, practices, and processes, with justifiable, defensible pay differentials between employees.

• Pay and compensation system structured with salaries that are commensurate with assigned duties, promotional opportunities and recognizable compensation growth that does not indicate any bias as outlined in California’s Equal Pay Act.

• Conduct an in-depth analysis should pay equity issues be identified and review data points to determine whether there is a reasonable explanation for the pay differences as outlined in California’s Equal Pay Act.

• Evaluate and provide recommendations on a variety of processes to align compensation practices to ensure pay equity to mitigate the organization’s future potential financial and legal exposure.

• Develop and design metrics, evaluation systems and processes to promote and advance pay equity core strategies to continually ensure fairness in organizational pay.