Pay equity is the practice of paying equally for work of equal value. But what do we mean by work of equal value? And how can we ensure that we are using the right measure for that? There are two key pillars in ensuring fairness and equity in pay: the reward framework and the implementation and communication of that framework.
Pillar 1: The ideal Reward Framework
Every company is three key steps away from achieving the ideal framework for reward.
1. Job Evaluation
Job evaluation is step one in establishing the value that an organisation places on roles. It enables an organisation to objectively size roles based on a range of factors: the expertise needed to perform a role, the complexity of the role and the impact the role has.
The term comparable work is a key part of the requirements of the EU Directive and will place an increasing amount of scrutiny on how roles are assessed.
A Job Evaluation exercise gives clarity and context, for example, around the difference between a manager’s role and that of their team. This enables HR and business leaders to better understand and justify whether a difference in pay is proportionate.
2. Pay Benchmarking
Although two roles have the same value internally, externally they might be judged differently. Pay Benchmarking uses market data to help further understand what a typical pay differential might be between a manager and their team. Armed with this data-backed information, a company can decide how achievable it might be to make changes in the short, medium or long term.
This process is also used to review how individuals compare with the market and to assess any differentials, typically caused by length of service or performance-based increases. In clarifying ‘typical’ it also plays a key role in perceptions around fairness.
3. Ongoing measurement of Performance and Pay Structures
There are many ways to scrutinise and measure pay structures but the most important things are that a) it happens, b) it is done consistently across the organization, and c) with no ambiguity or subjectivity. If Job Evaluation is the building of the car and Pay Benchmarking the MOT, this is the regular service and ongoing maintenance that keeps the engine ticking over. This should include pay equity analysis reporting every year or at least every other year to ensure the numbers are fully interrogated.
Pillar 2: Communication
This work is crucial for the company to undertake - and HR will typically play a major role - but remember that most of it goes unnoticed by employees, and even managers.
The other key part in all of this is making sure we bring our people along with us. We need to communicate the process and the decision-making framework succinctly, especially to managers who then re-use that education and communication framework in relaying the message to their teams.
By communicating clearly around pay and career progression, we enable employees to understand how pay is determined which in turn empowers them in their options, aspirations and decision-making around progression within the company. It also helps to make pay review processes more transparent so, culturally, moves us all forward in that ongoing process towards greater transparency around pay and overall equity.
Innecto Digital platforms – Powering better business
- Need help and advice with Job Levelling? Evaluate >>
- Is your Pay Benchmarking up to scratch? PayLab >>
- Is Pay Review a constant headache? Advance >>
For advice around any aspect of Pay Equity, please contact Spencer.Hughes@innecto.com or get in touch to chat with a consultant and request a platform demo.
