There is ample evidence to show certain people earn less than their peers despite doing equivalent work. These pay gaps are most pronounced among demographics related to race and gender.
A 2018 study from the Center for American Progress found that over the course of a 40-year career, Hispanic women working full-time will earn over $1.1 million less than a white male with the same level of experience, doing the same thing.
Thing is, while most people will readily agree this kind of discriminatory pay gap is a bad thing, they still exist. Implicit bias is a huge problem in this, as even those with good intentions can make damaging, inequitable decisions without realizing it. Beyond the fact that closing pay gaps is the right thing to do, here are a few more reasons this is important for organizations:
- Brand risk management – In today’s world of interconnection, word spreads like wildfire. If your organization is found to have negative pay equity practices, people are going to take notice and likely have a negative response. Digging out of such a negative association can be an uphill battle for brands.
- Limit liability – Not only can pay gaps shed a bad light on your enterprise, it can be a legal liability as well. Businesses that don’t conduct a pay equity analysis and are found to have major pay discrepancies might be setting themselves up for future legal trouble.
- Prioritize diversity – A diverse workplace comes with many benefits. Not only does diversity inherently imply a firm is looking at absolute talent and potential when hiring, it also brings a sense of innovation to organizations. More diverse workforces are able to identify problems that otherwise might have been missed by those without specific insight. Eliminating pay gaps will help attract a more diverse workforce, which will pay off for enterprises in the long run.
Being able to see pay gaps in detail can help fully identify and remedy them. Now that it’s clear why doing so is important, let’s look at what measures enterprises have at their disposal for drilling down on pay gaps.
How Can Organizations Drill Down on Pay Gaps?
Once you see the need to identify and eliminate pay gaps, the logistics of doing so should become a primary focus for organizations. While this might not be immediately impactful to operations or the bottom line—these things will be affected over time without properly addressing pay gaps. These are some methods enterprises should consider for drilling down on pay gaps in order to eliminate them:
- Work with a partner firm – Fixing pay gaps on your own can be complex and there’s no guarantee of success. Partnering with a firm that specializes in pay equity consulting can streamline the whole process while also yielding better results. The right consulting partner will have industry-leading experts who know what is required for making positive change, as well as proprietary technology to facilitate change.
- Always come back to the data – There’s no “drilling down” without data. Hard numbers don’t lie; and data analysis needs to be the modus operandi for achieving objective results from a pay equity audit. With the right analytics tools, it’s possible to see data on a granular level that allows for deep-level analysis.
- Utilize a pay equity calculator – Simple web-based tools can be great for enterprises that want to empower teams to gain a better understanding of pay equity within the organization. These can be fine-tuned to understand how certain changes will impact end results.
There’s no excuse for enterprises to ignore pay gaps. This is a well-documented phenomenon that should be remediated as soon as possible. Drilling down on pay gaps can help organizations fix internal issues faster.
