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Does Your Compensation Technology Support Diversity, Equity, Inclusion, and Belonging?

As companies realize the business benefits of having a diverse and inclusive workforce and paying those workers equitably, it is not surprising that technologies have arisen to support them in making that happen.

Does your compensation technology have what it takes to ensure you can deliver on your Diversity, Equity, Inclusion, and Belonging (DEIB) goals?

What is DEIB and why does it matter?

What do we mean by DEIB? Diversity means having a workforce that reflects the makeup of the wider community in terms of social and ethnic backgrounds, genders, sexual orientations, etc. It can be measured by the demographic makeup of the employee base (and support for diversity can also be reflected in supplier and procurement policies). Inclusion means giving all employees an equal chance to succeed, rise to senior positions, and have a seat at the decision-making table. Belonging is about making all feel welcome and able to express themselves. Equity means that everyone is treated fairly and without bias, and that applies especially to pay.

The rewards of DEIB practices have been well established by many studies: companies with diverse and inclusive cultures are more likely to be innovative, high-performing, and have better business outcomes. Employers that pay workers equitably and without bias enhance their brand, compete for talent and motivate and retain their employees. They also remain compliant with fair pay regulations, thus reducing legal risks.

So what can technology do to help realize the benefits of DEIB for a company?

The role of technology in supporting DEIB

Achieving DEIB goals requires more than just nice words on your company’s Careers page. Like anything else an organization aspires to do, the right technology is required to implement the policies effectively. As Gartner® notes in a July 2021 report, How Technologies Can Help D&I Leaders Power Organizations Beyond Resilience¹, “Organizations cannot scale and evolve their top-down or grassroots DEI programs without technology support.”

“These solutions aim at maximizing data-driven decision making and specific value drivers — such as transparency, accountability and efficiency — across talent processes,” says Gartner, estimating that, “By 2022, more than 75% of large enterprises will include D&I enablement criteria in their selection process for HCM technologies.”

According to Forbes, modern HR technology solutions are capable of addressing DEIB issues. “AI-based software platforms...can support the full range of talent processes, including who to hire, and how to manage them, as well as development, rewards, and promotions. The objective is to detect and mitigate bias at the decision-making step.”

The technologies most commonly associated with DEIB generally address areas like talent acquisition, talent management, employee engagement, and learning and development. Compensation management plays an important role as well because that’s where a company “puts its money where its mouth is” to ensure fair pay.

The importance of pay equity

One of the categories of DEI technology listed by Gartner (where beqom is named as a sample provider) is Pay Equity, whose main functionalities include:

  • Pay equity reporting/dashboard
  • Regression analytics
  • Budget to fix calculation and pay changes execution

Benefits of implementing pay equity technology, according to Gartner, include “reducing cost of noncompliance (fewer penalties and less employer brand impact due to negative press)” and “providing better integration with downstream processes (compensation management, payroll, and talent acquisition) as compared with using services.”

The new drive for pay equity

Diversity and pay equity have been topics of discussion for many years, but the last few years have seen increasing concrete action by companies to make DEIB a reality. In 2019, Mercer and RedThread Research published a research report, Diversity and Inclusion Technology: The Rise of a Transformative Market, that showed a renewed focus on diversity and inclusion (D&I) in the workplace, with companies beginning to implement technology solutions to drive progress toward their D&I goals.

“With more and more research demonstrating a direct link between greater diversity and improved business results, CEOs are putting real budgets in place to eliminate bias, ensuring equity in all talent processes, and demanding inclusive working environments. This is proving to be the fuel for change, and creating space for these technologies to grow,” said Carole Jackson, co-author of the report and Senior Principal in Mercer’s Diversity & Inclusion consulting practice.

“Rather than just providing one-off training of individual managers in unconscious bias or supporting individuals through employee resource groups,” says Jackson, “there's a shift to a more systematic organizational focus and a desire to create scalable change around D&I, which the right technology can help drive.”

What can compensation technology do?

What is required of compensation management technology to support DEIB? The main objectives of pay equity technology, according to Gartner, are to:

  1. Meet pay equity compliance rules across countries.
  2. Increase proactive detection of pay inequity.

Those may sound simple enough, but those are two challenging tasks. 

The challenges of pay reporting and compliance

Meeting pay compliance rules across countries requires a lot of flexibility in a compensation system, since different business rules and different checks and balances may be required based on the geography of the employees. 

For example, the US Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work, and that requires reporting on all forms of pay: salary, hourly pay, bonuses, stock options, profit-sharing, and other perks and benefits with monetary value. US laws also require companies to periodically report on CEO pay as a percentage of average employee pay. Such reporting and analysis requires a centralized compensation database to get accurate and verifiable information without painful, time-consuming manual processes.

A newly enacted California law requires employers to submit annual information on employee pay by gender, race, and ethnicity, identifying job categories and where employees fall within federally defined job bands. California standards often set the trend for future federal and international regulations. And, according to Employment Law Lookout, pay legislation is increasing around the globe, with 21 of 64 countries studied having pay equity reporting requirements.

Uncovering pay inequities and preventing bias

As we have written before, comprehensive data and analytics are required to understand whether or not your company has pay inequities, and even more sophisticated tools are required to provide “proactive detection” of pay inequity. To fix a problem, you first have to identify it. In a large company, the truth can be hidden within the data but can be teased out with machine learning and artificial intelligence, so that you can accurately identify and remedy pay discrepancies.

Selecting the right technology

Scalable technology to drive change: that’s the realm of beqom. beqom’s equal pay analysis and compliance solution enables companies to bring pay inequities to light, and proactively prevent them from happening in the future while providing the flexibility to meet global compliance requirements. beqom integrates seamlessly with Workday, SAP, Oracle, and other HCM systems to provide world-class compensation management. Contact beqom to learn how it can support your DEIB goals.

Learn more about beqom’s Equal Pay Analysis and Compliance technology.

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1 Gartner, How Technologies Can Help D&I Leaders Power Organizations Beyond Resilience, by John Kostoulas, 28 July 2021.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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