The Importance of Continuously Monitoring Pay Equity

In 2023, employees are being vocal about the importance of fair pay. Implementing fair pay may seem obvious, but in reality, it isn’t always the case. Due to this, there has been a large demand from employees, for their employers to address pay equity within their organization.

There are several ways to address pay equity within your organization. Many see fair pay as the right thing to do as you should compensate an employee an amount that is in line with internal and external rates for comparable jobs. As well as this, most states have legislative laws that you need to abide by in relation to pay equity.

In a recent webinar, our Salary.com experts concentrated on the role of continuous pay equity monitoring. A range of topics was discussed in relation to this, including relevant business and HR processes, the role of data, and why it’s worth doing the work. Let’s begin by diving into what the term pay equity means.

What is Pay Equity?

Our official definition of pay equity is:

Fair pay for comparable jobs that is internally equitable, externally competitive, and transparently communicated.

If an organization manages to achieve these three components, it will have a strong grip on its pay equity strategy. They shouldn’t sit back and relax, however, as continuous pay equity monitoring is necessary to respond to any internal or external changes in your industry, or job market. Carol Ferrari, Vice President of Salary.com product marketing, has this to say:

“Pay equity is not a one-and-done exercise, it’s not something you just need to do because you want to comply with your state or federal laws – although that’s very important. It’s foundational as something that requires a comprehensive solution as it reflects what’s happening inside your organization and what’s happening outside your organization.”

In the webinar, our experts discuss this idea in further detail, but understanding the importance of pay equity for the success of your organization is critical. Fundamentally, it can be seen as the way in which an organization approaches its relationship with its employees. Let’s dig a little deeper and find out which components play a key role in an organization’s approach to pay equity.

Using the Plunkett Pay Equity Framework

Here at Salary.com, when discussing pay equity, we must also discuss the Plunkett Pay Equity Framework. This framework outlines pay equity in 6 different stages:

1. Mandate Pay Equity
2. Group Comparable Jobs
3. Model Internal Equity
4. Benchmark External Equity
5. Communicate Transparently
6. Update Continuously

How Can Organizations Continuously Monitor Pay Equity?

Continuous pay equity monitoring is vital for all organizations. Maintaining pay equity begins with assessing internal equity and external competitiveness on an ongoing basis. Depending on the industry or organization, you may find that your organization’s pay equity is more dynamic than others.

David Turetsky, Vice President of Consulting at Salary.com, offers his perspective:

“Even a change in someone’s hours or a grant of a shift or a grant of overtime has the ability to change pay. Someone’s given overtime, someone’s given an extra shift, and that changes their total pay for a year. If we’re not looking at all the different types of decisions that can be made by supervisors and managers, then there are still ways in which we can help them understand that those decisions impact the ability for someone to be paid equitably and fairly.”

Understanding how quickly and easily the compensation of a worker can change gives you an idea of the importance of pay equity monitoring. Supervisors and managers that make these decisions must take into account how it alters the total compensation picture. As David later mentions:

“Pay equity needs to be something that is front of mind, not back of mind, when making decisions.”

To do this, organizations need to undertake their business and HR processes with careful consideration of pay equity. This means integrating pay equity strategies into your business procedures. As well as this, scheduling reviews once a quarter or year is imperative to pay equity monitoring.

As you hire, ensure that you build succession plans, promote, post jobs, set schedules/shifts, approve training, and so on. Doing this guarantees a diverse slate while you build pay equity and compliance into your business processes. If you can shift HR processes to become business processes, you can bring pay equity to the forefront of daily and weekly decision-making.

The Role of Data in Continuous Pay Equity Monitoring

Although everything mentioned so far may sound like a lot of work, it usually depends on your data and tools for reviewing and analyzing pay equity. When you set goals and measure them, data is key. David shares his take on the importance of data:

“Without having data, they [organizations] don’t know where they are, and they don’t know what to do.”

Alden Aikens, Solutions Consultant at Salary.com, describes one way in which you can monitor internal pay equity and external competitiveness:

“One of the main ways to help with this is to constantly have a finger on the pulse of market data and completing benchmark reports.”

Other areas where data is useful for pay equity monitoring include:

• Job description management processes, job levelling, and job evaluation methods
• Internal equity analysis
• Merit and promotional increase processes
• How you determine hiring pay rates
• Compensation, communication, and documentation
• Governance and degree of discretion by decision-makers
• Data collection, analysis, and technology optimization, including notifications when key attributes change

What Else Do Our Experts Say?

Our experts want to make it clear that pay equity is for everyone. If organizations can do the work now, they can create sustainable pay equity practices that are easy to update and maintain. Doing this can keep an organization competitive and increase its ability to attract and retain talented employees.

If you wish to learn more about the importance of continuous pay equity monitoring, you can hear from our experts and watch the webinar by following this link.