Equal Pay_ for Equal Work
Equal Pay strategies
Equal Pay for Equal Work is a fundamental principle in reward philosophy. It has been defined as a human right by the UN, and it is part of labor law in most territories. Pay equality is also now a social issue. Pay gaps do harm to the perception of your company, even beyond your workforce. All pay gaps are unintentional. They exist, even when your company philosophy say they shouldn’t.
Do you have a gender pay gap?
The fastest way to measure the pay gap is to compare the average pay between males and females. This method is simple, but also misleading. There may be perfectly good reasons for the difference in pay.
In our Equal Pay Review we use a multiple regression model to adjust for all factors affecting pay not related to gender – such as job level, performance, location, senority, tenure. By employing this statistical model we determine if the pay gap is reflective of a systemic gender based bias.
Why do gender pay gaps occur?
Systemic inequality is often the symptom of something else:
- Imbalances in your Job Architecture
- Lack of check and balance processes
- Lack of governance
If this is the case, chances are that the gender pay gap is just one unfairness among many.
How we fix it
Radical restructuring often leads to replacing one unfairness with another. We use an incremental process, made out of steps that all increase fairness and transparency.
When trying to achieve pay equality companies often just raise the salary levels of the lowest paid group to the same level as the highest paid group. Most often this leads to general overcompensation and swollen salary budgets. We align with the market levels, not at the highest denominator, and market benchmarks are pivotal to our process.
For equal pay reviews for global organizations we align with the local labor market, when we compare across geographies and functions. This is to ensure that pay equality are achieved across the lines of how the company is organized and operate its business lines, supporting transparent and fair leadership.
The ‘unadjusted’ or ‘raw’ gender pay gap is comparing the average pay of women relative to the average pay of men. It is done by using this formula:
Average Pay of Men – minus – Average Pay of Women – divided by – Average Pay of Men