Monday March 8th, 2021 marks International Women’s Day (IWD), a global day celebrating the social, economic, cultural and political achievements of women. The day also marks a call to action for accelerating gender parity. The IWD 2021 campaign theme is #ChooseToChallenge, believing that a challenged world is an alert world. We can all choose to challenge and call out gender bias and inequality. We can all choose to seek out and celebrate women's achievements. Collectively, we can all help create an inclusive world. From challenge comes change, so let's all choose to challenge.
One key area impacting gender parity is pay equity. The uncomfortable fact is that wherever pay gaps exist, they reveal inequality in the workplace and a lack of opportunity for all employees to earn the same.
Events of 2020 have significantly increased the focus on workplace equity, so much so that Deloitte indicates 96% of CEOs are now considering DE&I to be a strategic priority and a World@Work and Korn Ferry 2019 Survey of Pay Equity Practices indicates that 60% of organizations surveyed are taking action on pay equity management now. Yet many employers are reluctant to start the process, and in our interactions with prospects and clients, we find some recurring false truths that often need to be addressed. So, if International Women’s Day is about choosing to challenge, let’s tackle them head on.
The 5 false truths that prevent companies from addressing pay inequity are:
- “It’s safer to not conduct pay equity analysis because of the legal risk of disclosure.”
- “We don’t want to do the analysis because we are concerned about what we might find.”
- “Post COVID-19 we don’t have a talent shortage issue, so we don’t need to address pay equity.”
- “We don’t have the data to do pay equity analysis.”
- “Pay equity is not a top business priority right now.”
False Truth #1: “It’s safer to not conduct pay equity analysis because of the legal risk of disclosure.”
The resistance that some companies have around pay equity is fuelled by their awareness that it is a major litigation issue. If a company gets things wrong, there can be serious legal implications. An understandable cause for concern of course. If an employee decides to bring an equal pay claim against an organization, they may try to get a hold of internal pay equity analysis data - which highlights perceived equal pay risks. This is why many companies will state that it’s safer not to do the analysis at all, so that it does not end up discoverable during litigation.
Therein lies the false truth. Not conducting pay equity analysis does not mean the risk goes away. In fact, if left unaddressed, that risk will only grow as most pay equity issues impacting individual employees compound year over year. So, start by speaking to internal or external legal counsel with expertise in employment issues. Their input will be crucial in helping your team to understand the full implications of your pay equity analysis and any resulting actions to take.
A proactive pay equity audit can be protected under legal privilege so that you can control when, how, and what is disclosable.
False Truth #2: “We don’t want to do the analysis because we are concerned about what we might find.”
The reality is pay equity is a legacy issue for most companies and the results of a pay equity audit are often surprising - even in leading best-run organizations. But you have to start somewhere. And being honest about where you have come from and where you want to go is more authentic than doing nothing. Showing a commitment to pay equity through proactive pay equity audits and pay adjustments will in fact improve your brand reputation - especially with employees.
Today, more and more companies are committing to action against pay inequality and some of those will be competitors who are gaining ground in the war for talent. Surveys increasingly suggest that employees want an accurate and honest impression of an employer’s workplace experience and culture before making a decision on whether to join them. A 2017 PWC survey indicated that 86% of women consider an employer's policy on diversity, equality and workforce inclusion as important when deciding whether or not to work for them.
Starting the process to understand how pay equity impacts gender parity in your organization will prevent the problem from compounding and your team can begin the journey to pay transparency.
False Truth #3: “Post COVID-19 we don’t have a talent shortage issue, so we don’t need to address pay equity.”
Emerging from the pandemic, organizations in sectors impacted most by the economic downturn are facing significant hardship and are often in the unfortunate position to be disbanding workforces. So yes, I have actually heard this one debated on one of our webinars, that talent retention is not an issue so doing a proactive pay equity audit is not a priority.
But those sectors negatively affected by the COVID-19 crisis are where female jobs are more at risk than male ones, simply because women are more represented. If we don’t take action now, we will see a disproportionately regressive effect on gender equality. A PwC report published, ahead of IWD 2021, said that the pandemic was set to push the progress towards gender equality in the workplace back to 2017 levels. Already in the United States, data suggests that women made up 46% of workers before COVID-19 and factoring in industry-mix effects, this would equate to women being impacted by 43% of job losses. However, unemployment data actually indicates that women make up 54% of the overall job losses to date. This is not the time to abandon positive action to address gender parity.
All sectors need to work together to both protect and accelerate gender progress as we plan recovery. Monitoring pay equity and the adverse impact of human capital decisions is more critical now than ever.
False Truth #4: “We don't have the data to do pay equity analysis.”
Data is the driving force behind the ability to make informed decisions on pay equity. Robust employee data is critical as well as data on protected category status, types of compensation, and the factors believed to be legitimately driving pay variance such as tenure in role and performance.
Most organizations already collect gender data due to long-standing legislation. However, many do not have ethnicity or race data - and even fewer have data related to disability, LGBTQ+, or religion. This is data that needs to be collected sensitively and with informed consent. In fact, protected category disclosure (or declaration) rates themselves reveal a lot about companies, so it can sometimes take years for employees to be comfortable disclosing. Similarly, clean data on tenure in role is not normally held in an HRIS system and may take some time to get right.
There may not be enough data to meet all of your objectives in the first year. However, companies have to start somewhere. Our recommendation is to start smaller with groups that there is data for. At the end of each pay equity audit, re-assess these questions as new avenues for analysis will appear - and data errors could be highlighted.
False Truth #5: “Pay equity is not a top business priority right now.”
Yes, again I still hear this frequently, particularly from HR staff seeking to build the business case for conducting a pay equity audit. This is in the face of a wealth of evidence that gender diversity is key to financial success. McKinsey research has found companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile. Recent data from Pipeline Equity shows that for every 7% in gender equity within a business, there is a 3% increase in revenue - and that this increase is due to more efficient recruitment, higher performance and production, and most importantly increased retention.
At this critical time, companies pulling back on proactive diversity and inclusion actions such as pay equity audits may be placing themselves at a disadvantage, by limiting their access to talent, diverse skills, leadership styles, and perspectives that will harm their businesses in the longer run. Ultimately, not doing pay equity analysis can lead to increased litigation risk and brand damage. None of which discerning business leaders want to have on their record.
This year, challenge gender parity and pay equity barriers
Unfortunately, there are still too many barriers to gender parity and pay equity in our workplaces and societies. Let’s not let false truths hinder progress. Only by analyzing employee data can we move beyond anecdotal evidence and subjectivity to truly measure inequality. Only then can we understand where disadvantage occurs in order to take corrective actions.
So, on IWD 2021, let’s challenge those barriers!
Want to see how you can use CURO Pay Equity analysis software?
Book a 1:1 demo with us.
Want to see how you can use CURO Pay Equity analysis software?
Book a 1:1 demo with us.