Posted by Justine Woolf on 03 November 2023
Practical measures to tackle pay gaps
Instances of unequal pay can manifest all too easily, but they can also be guarded against by building a greater understanding of the data available, and then auditing and benchmarking, which often requires outside help. Here are some key areas for companies wanting to make genuine strides in this area.
Understand the data - While Gender Pay reporting exposes pay practice within businesses, the regulations by themselves only go so far. To apply best practices for your own organisation sometimes you will need help to understand not only your own data, but also the nuances of the regulations, and how you may want to go the extra mile. Currently, for example, Pay data is collected on pay post-salary sacrifice. This means that a man and woman with identical jobs and salaries might appear to have different pay if one commits more to pension and the other to childcare vouchers. On the other hand, company partners’ salaries (typically male-dominated) can be excluded from reporting, which may skew things. Meanwhile, data around part-time and full-time workers' bonuses are not treated the same, further clouding the picture. There are many examples of how pay data needs a forensic eye and an experienced hand to avoid misunderstanding.
Annual Benchmarking – only by going through an annual benchmarking exercise can you keep your pay structures and market rates current. Remember that ‘market rate’ can be used as a material factor defence in Equal Pay Tribunals, so it is critical that you retain evidence that supports every ‘market rate’ salary decision you make, and store that evidence for six years. The ‘market rate’ defence evaporates after a certain time, which is another reason for regularly reviewing your knowledge of current rates, and gathering fresh evidence to support your view. How often should you do this? Probably every year – if you need help or advice reach out to us. Using PayLab, Innecto’s revolutionary pay benchmarking solution, can help you easily understand where you have pay discrepancies and compare individuals against the market rates or you can compare on the basis of gender and/or ethnicity.
Job Evaluation System – Before you can consider doing an Equal Pay Audit, you need an objective framework to fairly assess and compare roles. By sitting down and talking with you, our consultants help set out a structured blueprint across your organisation, allowing you to slot people into certain levels with confidence and consistency. Whilst job-levelling goes some way to achieving structure, a job evaluation system like Evaluate is underpinned by multiple factors and data points that ensure roles are correctly levelled and roles of Equal Value are identified.
Remember too that if a role changes in evaluation terms, its position in the market and in the pay structure may change, so you need a way to keep on top of this.
Equal Pay Audits - While the Pay Transparency Spectrum is broad, there is a general acceptance that pay secrecy allows gaps to stagnate and even grow. At Innecto we are receiving more requests than ever for Equal Pay Audits as private sector businesses explore the best way to lift the lid on how their policies, practices and allowances are being applied.
This analysis gives valuable insight into companies’ pay risks, either at a fixed point or over time. We can track new recruits to compare the relative journeys of a man and a woman starting in the same role on the same day. Beyond gender, we can overlay ethnicity policy, age categories or pay scales to analyse current levels, project forecasts or create aspirational perspectives. Looking beyond simple pay, we can also assess the application of things like flexible working or paternity leave and see how they vary across organisations, if left unchecked.
Annual Pay Review (APR) – make sure you are asking the right questions around your annual process. These may include:
- Are our data sources robust and up to date?
- Are our annual pay awards made in a consistent manner, in line with pay policy and linked to personal performance or productivity?
- Are we auditing our performance ratings and annual pay review regularly enough to guard against gender bias?
- Are ad hoc awards outside of the APR undermining internal equity?
- Are our pay protection policies fit for purpose from a gender perspective? Are we on top of any amounts being frozen, or is it possible we are overpaying?
By being mindful of all these steps you can reduce pay activity outside of the Annual Pay Review and mitigate against the ‘grey economy’ where managerial discretion can happen. There will always be flight risks you need to deal with - and you will never eliminate them - but you want as much of your pay review as possible to happen ‘in the zone’ around your pay structure and benchmarking policy.
Being open and transparent and challenging yourselves to ask these questions should help build an engaged, happy and productive workforce, and enable that workforce to become more diverse and inclusive.
If you feel you could benefit from talking with an Innecto consultant about Pay Benchmarking and Equal Pay Audits, please GET IN TOUCH >>
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