Does Your Org Pass the Pay Equity Test?
Once upon a time, the terms “pay equity” and “salary benchmarking” may have been as frequently used as “PCR” and “PPE,” but those days are gone, at least for organizations who are winning on talent and retention. A recent Mercer study shows that pay is currently the number one factor in employee satisfaction. If you want to stay in the game, you need to make sure you have a strong compensation strategy in place at your business. Period.
Why Does Pay Equity Matter So Much All of the Sudden?
Pay equity has always mattered - but it hasn’t always been front page news. Still, recent events have rightfully drawn bright focus to pay and compensation. First, there’s the fact that women only make $.83 cents on the dollar for doing the same work as men. This discrepancy is explored in even more depth in the annual release of LeanIn.Org and McKinsey & Company’s “Women in the Workplace” report. This sweeping analysis shows that women are not only underpaid, but underrepresented, and are not afraid to leave their organizations in search of something better.
In other news, on August 30, 2022 California passed new legislation requiring employers with 15 or more employees to include a pay range in all job postings. California follows Illinois as the second state to call for mandated equity in this arena and other states are set to follow suit. Even if you’re not a California or Illinois employer, if you have remote employees, these rules impact you, too.
What Is Compensation Benchmarking?
Compensation benchmarking is a process that matches your internal jobs with market pay data or a salary survey to identify the market rate for each position. When thinking of compensation, base pay is huge, but you’ll be considering your other benefits as well - 401k matching, unlimited (paid) time off, health care, etc. Salary benchmarking, meanwhile, is a similar process that only takes pay into account. Both processes allow you to ensure you're paying the right amount to keep a balanced budget while simultaneously making your employees feel valued.
Get Started With Equal Pay Today
If you’re not sure how equitable your pay and compensation packages are, they likely…aren’t. BUT! You can get started on leveling the playing field with some simple steps you can take today.
1) Start with a Philosophy
It’s easy to want to dive right in and increase everyone’s salary (Must. Keep. Talent.), but you want to pull back and look at the big picture first. What is your company’s company philosophy? You want to ensure that your philosophy is simple, transparent, and aligned to your company’s values. Knowing what your strategy is - and sharing it broadly - is the first step in ensuring equity across your org.
2) Don’t Get Hung Up On Titles
When starting the benchmarking process, it’s infinitely more important to look at job responsibilities than titles, especially if you’re an organization that’s smaller and has people wearing many different hats. For example, maybe an employee is managing customer service in addition to their full-time role as an analyst. Best practice is to determine the rough amount of time that employee is spending on customers, and then benchmark that percentage of their salary against customer service representatives.
3) Use a Trusted Resource
If your organization is larger, or if you have lots of “non-traditional” roles at your company, it may be smart to use a resource designed for compensation benchmarking. At Agile Talent Consulting, we like Payfactors from Pay Scale (and we can help you use it, by the way!) Platforms like this allow you to get access to survey data from thousands of organizations, as well as to dive into the market rate.
4) Look at the Big Picture
Once you’ve determined that market rate, you need to decide how you’ll use it. Many organizations choose to target at the market’s 50th percentile or even lower when hiring. A great decision from a corporate fiscal lens, but does that align with your previously determined philosophy? It may! Or you may decide that the 50th or lower approach doesn’t match and choose to go higher on the scale. Whatever you do, do so with intentionality.
Compensation Benchmarking Have You Beset?
Strike a balance between pay equity and managing costs with Agile Talent Consulting. We make sure your compensation strategy works.
