In the first blog of this two-part series, we looked at the importance of pay equity and the challenges in implementing it, along with the steps needed to evaluate your pay equity status and plan an approach that will work for your company.
In this blog, we will cover the steps needed to make pay equity an ingrained part of your culture and operational practices.
In our last blog, we covered the first four steps for achieving sustainable pay equity, dealing with analysis and planning:
- Evaluate Your Current Pay Equity Status
- Define Your Goals
- Determine How to Measure Progress
- Identify influencing factors and metrics
Now let’s see how you can build pay equity into your HR processes to get lasting results.
Making pay equity a part of your organization
Here are four more steps that can help you make pay equity an organic part of your culture.
5. Infuse pay equity into HR decisions and processes
To make pay equity sustainable over time you will need to Integrate pay equity considerations into your HR compensation and performance processes.
Many organizations are rethinking pay strategy, including the performance and pay review cycles. While most companies still do annual or semi-annual pay audits, many are starting to take a broader approach, with equity checks at every stage of the employee lifecycle. This reflects the reality that factors that influence pay equity can happen outside of performance reviews.
Having a tool that can analyze pay equity regularly can help with more continuous action-taking, incorporating pay equity practices into day-to-day decisions like offers and promotions. Solutions like beqom that use machine learning to identify pay inequities and at-risk employees can help managers make smart comp recommendations, preventing bias and closing gaps.
6. Review your performance processes
A lot happens outside the performance review. For this reason, many companies are looking at a continuous performance management process.
We typically think about performance management as reviews, goal-setting, and interactions with managers. But decision-makers can get a more rounded viewpoint of team member performance by gathering wider feedback. To manage performance effectively requires objective feedback in the review process. Subjective performance reviews without specific metrics can lead to unconscious bias and compounded stereotypes. This is where a feedback mechanism that is part of the daily workflow can provide tremendous value.
Receiving feedback from an employee's peers, incorporating cross-functional perspectives, and conducting regular manager check-ins offer a manager a more comprehensive view of the employee's contributions. Implementing a feedback mechanism also ensures that employees are better prepared for performance reviews, reducing the likelihood of surprises. This alignment of feedback and performance reviews leads to increased productivity and fosters a deeper understanding of individual purposes, resulting in higher levels of happiness and engagement among employees. As a result, the organization benefits from a more motivated and fulfilled workforce.
A good performance management solution, which provides rich data about the corporate culture, can allow HR to access data and real-time insights, and understand experiences throughout the organization. This provides the ability to look for subtleties in the data. For example, studies have found that women are 20% less likely to get growth-oriented feedback, which can hamper their ability to grow, develop, and be promoted.
To use gender as an example again, women are more modest in their self-evaluations, which can impact performance review outcomes, as well as affect the workplace culture and comp decisions. A performance management solution can give leaders more insight into what is going on in the culture and guide them in making decisions that will lead to a happy, productive workforce.
7. Set policies for trust and transparency
Pay transparency breeds trust, and trust yields loyalty and productivity. Transparency is taking on increasing importance as there is a growing awareness of pay gaps among employees. beqom’s 2023 survey report on pay equity and compensation, Leveling the Paying Field, shows that 51% of employees believe their employer has a pay gap problem. And, one-quarter don’t believe their employer is taking action.
Transparency looks different in different companies. Transparency practices have to be right for your organization at a particular point in time. There is no one-size-fits-all approach—it’s a spectrum. Some companies may share market data, others may share salary ranges with the entire organization. The important thing is to convey a sense of fairness and good faith.
Establish policies that promote trust and transparency regarding pay practices within your organization. Communicate these policies to all employees to instill confidence in your commitment to pay equity. Encourage open dialogue and provide a platform for employees to raise concerns about pay discrepancies without fear of reprisal.
A common starting point for transparency is that you must understand your data (see step 1) and make sure it looks right. Then decide what’s going to work best for your populations. Get feedback from leaders on the ground in each location. Get buy-in from your leadership. Tailor the approach to be appropriate for different regions or business units. For this, your compensation management tools need selectability.
A culture of transparency, not just around pay but around decision-making in general, can pay off in terms of trust and commitment. To support this kind of environment, give stakeholders the right tools. For example, a performance platform that supports employee-driven feedback and manager coaching, linked to company goals and values, can give employees a sense of ownership and open up alignments in the employee-manager relationship.
8. Support managers with communication and tools
Managers play a critical role in implementing pay equity initiatives. Provide them with training on equitable pay practices, so they understand the importance of fair compensation and can confidently navigate pay-related discussions with employees. Offer tools and resources to help managers make informed decisions that align with pay equity objectives.
Communication can be a challenge, especially where there are language barriers. Still, people need to understand what, how, and why they are being paid. Tailor communication for specific populations. Get the views of business partners on the ground to make sure your communication makes sense and that people understand what you’re telling them.
Give employees toolkits to have effective performance conversations. Support managers in their role as coaches. Give them the “why” of your strategy and they will be more likely to be aligned and understand why coaching is important and embrace the coaching mindset.
Be factual and not condescending in your communication. Managers likely have already heard a lot about unconscious bias and may be getting tired of those conversations. Instead, look at the data and see where guidance is needed. Gather quality metrics, see where and how feedback is happening across the organization. Give coaching on the experience you want your leaders to deliver (check-ins, more feedback, etc.) to have a consistent and transparent process.
Achieving sustainable pay equity
Achieving sustainable pay equity is an ongoing journey that requires intentionality and continuous commitment. By evaluating your current pay equity status, setting clear goals, measuring progress, identifying influencing factors, and infusing pay equity into HR decisions, you can create a more equitable workplace.
Setting policies for trust and transparency, and supporting managers with communication and tools will help reinforce your organization's commitment to fair compensation practices. Assess the tools you use to support the compensation and performance processes.
- Do your compensation tools allow you to continually assess and mitigate pay gaps?
- Can you easily generate the mandatory pay reporting needed to meet compliance requirements?
- Do your performance tools enable you to develop a culture of transparency, feedback, and coaching?
- Do you have the flexibility you need to address local needs and global complexities?
Pay equity not only benefits your employees but also strengthens your company's reputation and fosters a culture of inclusivity and equality, leading to improved recruiting, retention, and productivity. The ability to understand and address pay gaps helps to reduce legal risks and ensure regulatory compliance.
Would you like to know how compensation and performance technology can support you in achieving pay equity and top performance? Contact beqom to set up a conversation.
Find out what employees think about pay equity and compensation in our 2023 survey report,
Leveling the Paying Field: A Look at the Gender Pay Gap and Other Compensation Trends.