Before Starting the Equal Pay Discussions Do a Salary Review

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There was a lot of buzz last week with regarding the 2014 Paycheck Fairness Act (and Equal Pay Day). The act was put to a vote in the Senate — and failed. It was six votes short of passing. This is the third time it has failed. Even though the Equal Pay Act of 1963 is still in play, I have a feeling that the Paycheck Fairness Act may come up again. Now I know that this a hot political topic — I don’t want to go into the politics or party lines of the act. What I DO want to do is look at this from an HR perspective. The act seeks to minimize the wage gap between men and women (I know that some of those statistics are have come under fire — but for the purpose of this article, we’re going to set that aside.)  Do you think that there is a equal pay problem? Now before you start crunching numbers and looking at salaries between men and women at your organization to see if your firm might have an issue with this, ask yourself, when is the last time you did a true salary and job review? Has it been a while? Have you cut some corners?

If so, that’s okay  (okay with air quotes, right).  Take a moment to get some good practices and process in place. First, I’d recommend doing a job analysis to ensure that your jobs are priced correctly in the market AND location. If you have not priced your jobs in the last 3 years (may be shorter or longer depending your industry and types of jobs so use your judgement) then its time to do some work. You want to get a good handle on the jobs that you have, what you pay and how they are compare to the same (or very similar) jobs in your industry and regions. Are you above or below the market rate — and its okay if you are, by the way, but you should know it and have a clear strategy around why that is your position in regards to pay. To get some good data around this, you’re likely going to have to partner with a third party firm — sadly, HR professionals don’t freely give this information to their competitors but they do give it to third parties with no conflicts of interest. You’ll have to earmark some money in your budgets help with this data. Honestly, the cost of these services are why many firms don’t do this type of review on a regular basis. Do some due diligence, there are options that will suit a variety of budgets. Another approach — segment out your organization, review it is chunks if you can’t afford to do everything all at once.

When you do your job analysis, also take the time to look at the type of work that the position is doing — this may be an opportunity to adjust job titles and job descriptions to better align with the market. Caution – do not do this in a bubble. Remember, there are people doing the jobs of those job descriptions so you will want to have a good handle on what is changing and the impact that will have on the people doing that job. Its a bigger task than it sounds, but the call out is that there is a correlation and you want to look at both pieces of the equation. I’d also recommend calling out  key or critical skills for each position if you have not already and even giving thought to critical  jobs for your organization. Understanding these skills and jobs will also help you with some of your overall compensation and business strategy in regards to pay.

Okay so your jobs are now priced correctly and your job titles and job descriptions have now been updated. Now you are ready to start doing some analysis.  You’re probably ready to get into the gender data — but before (or at least do it at the same time) you start digging into that data, also take a look at pay through the lens of recent hires vs. some of your longer term employees. You may have gaps there to address too, so don’t forget to evaluate this as well.

While my intention is not to give a Comp 101 and 102 lesson (because I have left a lot of stuff out). What I hope that I can drive home is that this is activity that you want to review regularly — don’t pencil whip it and put some real thought and strategy to it. Put a process in place that is repeatable and meaningful. You don’t want to set a salary for a job description and forget it. You don’t just pay candidates whatever they ask for because you don’t want to lose the talent (yes, I know that there is a war for talent). We all know that its just not that simple. I think that as HR pros, we’re great about getting the offer to look right at the onset and then thinking about pay in terms of performance considerations, but those are just a couple of the levers. Pulling a few reports to  compare the pay equity of men and women is just going to give a part of the picture that you need to look at — because that picture may be changing.  My thought is that with regular and thoughtful salary reviews of your firms jobs, understanding the market, key skills and critical jobs, we’ll be better armed to ensure that all employees (women and men) are getting paid correctly and consistently — which should help drive equality.

Its not easy, and there is a lot more to it, but this would be a good start for any firm who is not doing this type of analysis.  What do you think? Too idealistic or maybe I’m just really naive?

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