May 7, 2019 – Scottsdale, AZ, Los Angeles, CA – The “2019 Pay Equity Practices Survey of C-suite and Reward Leaders,” conducted by WorldatWork and Korn Ferry, reveals that while a slight majority of organizations are addressing pay equity in their workplaces, one third are still only considering doing the necessary work, and seven percent say pay equity is not on their company’s radar.
The study suggests that even when pay equity gaps are uncovered, large organizations are taking a measured path to address them. Roughly three-fourths of organizations have or are conducting remediation or are working to resolve causes of pay inequities, but there is still room for improvement:
Equity Pay Work Not So Transparent
While nearly a third (31 percent) of surveyed organizations agreed that the primary objectives of pay equity programs are to build and maintain a culture of organizational trust, many companies are missing the opportunity to build trust through transparency about their pay equity initiatives.
A majority of those companies engaged in pay equity management activities are sharing their intent and findings with senior leaders (90 percent) and people managers (65 percent), but keeping largely mum to the workforce at large.
“This is a cultural miss,” says Scott Cawood, CEO, WorldatWork. “Full transparency on compensation topics and a stronger employee understanding of an organization’s compensation philosophy and processes cultivates greater trust and a sense of fairness. A workforce that trusts its leaders and feels fairly treated is more committed and motivated to deliver results.”
Demographic focus on protected classes goes beyond gender
While there is a clear focus on gender pay equity in the media and regulatory arenas, organizations are primarily focused on looking at gender and ethnicity when conducting analyses, the survey found.
Pay equity analyses often result in increases to fewer than 5 percent of workforce
A typical organization treats between 1 percent to 5 percent of their employees with a pay equity increase with on average a 5 percent increase, implying that total impact on payroll typically ranges between 0.1 to 0.3 percent of total base salaries.
C-Suite and HR Have Different Priorities
Who is driving pay equity management at the organization has significant implications as to the scope, nature and impact of the work.
Typically, the C-suite or HR departments initiate these efforts, but once a pay equity management program is in place, HR drives the process in 77 percent of companies surveyed, usually with support from the legal team.
“C-suite executives see these initiatives as primarily about building a culture of trust in the organization. Total Rewards leaders see these programs largely about being compliant with a changing regulatory environment,” said Korn Ferry Senior Client Partner, Tom McMullen. “While both are critical objectives, the nature of the project, how this work is conducted, communicated and implemented can vary significantly depending on the group driving the effort.”
“As the professionals charged with evaluating compensation throughout an organization, Total Rewards leaders are in a unique position to help businesses ensure equitable and rewarding pay practices,” says Cawood. “This survey suggests that there is still a lot of work to be done.”
“A convergence of regulatory, political, social and economic forces is causing organizations to address pay equity management; ignoring the issues will ultimately impact employee engagement and an organization’s bottom line,” said McMullen. “There are proven links between diversity, inclusion, engagement and organizational performance. Pay equity – and how it is managed and communicated across the organization – can drive that positive change.”
NOTE: Journalists may request a complimentary copy of the survey report by contacting Judy Kalvin, firstname.lastname@example.org
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