Without doubt equality has been in the spotlight more in the last year, especially in the context of Black Lives Matter and fair pay for key workers. However, as we head into 2021 the question now is how we turn that into lasting change. For decades society has been slow at addressing gender and racial inequality and it cannot take tragedies like the death of George Floyd or the impact of a global pandemic to galvanise momentum.
We are starting to see some companies take action. Some aren’t waiting for the legislation and are taking proactive action to better understand pay equity across their organisation and bring Equality, Diversity and Inclusion into focus through ESG measures.
Understanding pay equity is a start, but being open with employees and society about what it looks like in your organisation can be a difficult step to take. There is a reason why the government entered into consultation around compulsory ethnicity pay gap reporting: it’s expected that many businesses, if not most, will need to go on a journey.
But in my opinion being open about pay equity should be a win-win situation. If you have a good news story to tell then shout about it, encourage others to follow your lead and add real weight to taking action to address racial inequality. If, like many businesses, there is a journey to go on to reach pay equity, then being open about it shows employees, investors and the public that you are serious and that you are prepared to be held to account. I was working with a client recently who said they aspire to have 100% pay equity and they can only do that by first understanding where they are starting from. The fact that they don’t yet have to publish their ethnicity pay gap isn’t stopping them. For them it is truly about integrity, about doing the right thing rather than about legislation forcing them.
If you attended our annual Pay Trends event at the end of January you may remember an attendee commenting that trying to keep a lid on your pay equity position is short sighted as websites such as Glassdoor allow candidates to express their views regardless. Transparency, whether it be around pay decisions or pay equity, builds trust and even if that picture isn’t yet what you want it to be, have faith in your employees that they will respect your openness. Communicating a clear understanding of where you are and what action you intend to take gives something your employees can get behind. It shows them that you are committed to change and that as a business you are in tune with the mood of the country to bring about substantial and lasting change.
We are seeing businesses use a variety of methods to help understand where they are: analysis such as Equal Pay Audits, Ethnicity Pay Gap Reporting and conducting discovery analysis around the reality of pay practices, all of which helps clarify the starting point.
The next step is to then understand why this is happening and what action needs to take place to start the journey to pay equity. Often it can be a lack of readily available data insight when making pay decisions. Using analytics dashboards to review the data before making pay decisions, such as through our Roles Hub or Advance platforms, can help ensure decisions improve rather than exacerbate pay inequity. For some organisations it may be necessary to review the pay policy or pay principles. Often the salary given to an internal promotion is driven by their previous salary rather than the market data for the new role. Some policies cap the increase that can be given at one time and while this isn’t necessarily without justification, if there is no pay progression mechanism then the pay inequity can remain.
Any steps taken by an organisation towards pay equity and responsible reward are without doubt a step in the right direction but if we want to harness the current acceleration of change then we need to be brave enough to speak out and be visible in the changes and the steps our organisations are taking. There is much that has been outside of our control over the last twelve months but taking steps towards pay equity and supporting a permanent shift towards more responsible reward is something that is within our gift.
Responsible reward is something we are truly passionate about at Innecto. If you'd like to discuss further, please email me at email@example.com, or call our consultancy team on +44 (0)20 3457 0894. You can also download our latest responsible reward whitepaper here.