Global Pay Equity: new pressures, new strategies
Pay equity — the notion that pay levels should be equitable for all employees regardless of their demographic background — is top of mind for many executives. In fact, interest in this topic has reached new levels, as exemplified in recent efforts by large organizations, particularly in the technology sector, to publicly discuss and disclose their achievement on pay equity (e.g., the difference between women and men in term of cents on the dollar) and existing processes.
Globally, organizations face escalating pressures, from new reporting requirements in the UK to the possibility of proactive analyses in Germany to continued regulatory focus throughout the European Union and in Australia. Moreover, in the US, state legislators have launched a series of efforts to monitor and regulate comparative pay levels and to limit the ability of organizations to set starting pay based upon rates from prior employers.
Although regulatory and cultural pressures have played a role in focusing executives on this topic, organizations globally have strategic reasons to be concerned. For example, consumer product companies have realized that their products may not optimally serve all of their customers if product developers are predominately white men. Business needs, combined with regulatory and societal pressures, have led organizations to evaluate the processes they use to pay employees and also the approaches they use to attract, retain and motivate a diverse workforce. Workforce analytics plays a key role in such evaluation.
While the World Economic Forum projects in its 2016 Global Gender Gap report that it will take 170 years to eliminate broad opportunity gaps between men and women (up from an estimated 118 years reported in 2015), our When Women Thrive Businesses Thrive research demonstrates that a focus on within-role pay equity can help companies make significant progress in building diversity — and employers can close such pay equity gaps. In this overview, we discuss some of the recent regulatory changes and then provide proactive steps you can take to ensure equitable pay among your employees. Although the discussion focuses on the US and the UK, similar approaches can be deployed in other countries to address regulations and to understand and eliminate pay gaps. We advocate a global focus on this issue.
Converting these findings into an effective and sustainable solution for your organization will require a deliberate consideration of your overall talent management strategy and customizing interventions that supports Gen Z within your multigenerational workforce.