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Evaluating Progress Toward Pay Equity and Inclusion

WorldatWork has designated October as “Workplace Equity Month.” To shine the spotlight on issues of pay equity, diversity and inclusion, and social justice, Workspan Daily will be publishing various articles throughout the month on related topics. Visit our Workplace Equity page for more content on this critical area of total rewards.

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Employers and experts talk a lot about an American workplace where employees are paid equally for equal work.

And every smart organization recognizes the need for a workforce that better reflects the diversity in our broader society.

We’re not quite there yet, on either front.

For example, women made 82% of what men earned in 2019.

The number of female CEOs at Fortune 500 companies, meanwhile, hit an all-time high this year: 37. That translates to women leading just over 7% of the world’s largest organizations.

Minorities held 25% of supervisory and managerial positions in 2019, and represented 27% of new hires into “mission-critical occupations” last year.

These figures also represent an uptick from past years. And findings from the new Workplace Equity Study, conducted by WorldatWork and Korn Ferry offer more encouragement, suggesting that we are making progress toward pay equity and a truly diverse and inclusive U.S. workplace.

The study, which included 964 responses from organizations of various sizes and from multiple industries, sees 60% of companies saying they are addressing pay equity in their workplaces. In addition, 70% said their organizations are taking action on diversity, equity and inclusion (DEI).

The Workplace Equity Study follows a WorldatWork pay equity practices study fielded in January 2019, which provided a benchmark for pay equity questions posed in this current study.

The 2020 research finds more companies taking specific steps to focus on pay equity. For example, the number of organizations conducting compensation analyses once a year or more frequently increased from 65% last year to 73% in 2020.

Overall, however, less than one third of the companies polled (31%) give themselves high marks for pay equity management. Just over half (56%) described their organizations as “mostly equitable,” saying that “some pay discrepancies exist” within their firms.

In terms of openness around pay equity communications, 16% of respondents said their organizations have “high” or “full” transparency. The largest number (65%) characterized the level of pay equity communications within their companies as “some” or “moderate.” Another 19% said their organizations are not transparent at all in this regard.

While pay equity statistics changed little between the 2019 and 2020 studies, Deirdre Macbeth, content director, regulatory, at WorldatWork, sees reason to believe that many organizations are on the right track toward pay equity.

“I actually view this as a positive trend, in light of the current pandemic environment, i.e., [numbers] did not decrease at all and companies are still willing to invest their time, resources and expenses on pay equity efforts,” says Macbeth, “despite the economic challenges they are facing this year.”

Tom McMullen, a senior client partner at Korn Ferry and co-leader of the research effort, notes that it is becoming less of an option for organizations to sit on the sidelines on pay equity assessment.

“There are obvious engagement, credibility and reputation benefits in organizations focusing on pay equity management. In addition, there is a strong likelihood of continued regulatory focus and increasing calls on transparency in pay equity reporting. This should be a wake-up call for organizations, especially with the 40% of organizations who have not yet taken action.”

The study also asked a variety of DEI-focused questions, finding that most organizations are either taking action (70%) or have diversity, equity and inclusion on their radars (23%).

What’s driving this commitment to DEI initiatives? The most common responses were “to build/maintain a culture of trust,” “to remove bias against protected classes” and “to align our actions with employee expectations.”

Ultimately, these findings reflect the fact that 2020’s social justice efforts have served as a galvanizing force for many companies' DEI efforts, says Scott Cawood, WorldatWork president and CEO.

“We see that nearly every organization is either taking action or has DEI on their radar. This shows momentum to close the pay gap and move toward more diversity and inclusion in the coming years,” he says.

Cawood is alarmed, however, by the 7% of respondents saying that DEI isn’t currently a priority within their company, and suggests that a failure to focus on diversity, equity and conclusion could carry negative consequences.

“These organizations are putting themselves at risk of criticism, or worse, and making themselves less appealing to prospective employees.”

About the Author

Mark McGraw 

Mark McGraw is managing editor of Workspan.


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