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Leveling the Playing Field: Equity in Compensation

PERKS Editorial Team

PERKS Editorial Team

·

October 20, 2021

The Building Culture Podcast - Episode 3.6

Leveling the Playing Field: Equity in Compensation

What does compensation have to do with DEI? For this episode, Eileen and Evelyn sit down with Heather, a compensation professional, to ask all the hard questions - how to address pay discrepancies, important data to look at, and what equity looks like in compensation.

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Show notes:
  • Some people are not familiar with the role compensation plays in the HR department. Heather discusses where comp fits in the big picture.
  • Why are we dedicating a whole episode on compensation in this DEI season?
    • Talking about pay is taboo.
    • But we know pay gaps still exist today, and we want to talk about how that can play out in organizations. How can we break barriers so that we create a more inclusive and equitable organization?
  • What is the difference between pay equity and pay equality?
    • Pay equality is equal work that results in equal pay, regardless of gender, race, ethnicity, or any other characteristics.
    • Pay equity: delves into the reasons why wage gaps exist for different genders, races, and ethnicities.
  • Numbers from a study by the National Partnership for Women and Families (2021):
    • Latina women: 55c to every $1 to white, non-Hispanic men
    • Native American women: 60c to $1
    • Black women: 63c to $1
    • White women: 79c to $1
    • AAPI women: 52c to $1
    • Statistics show that women only make 81 cents for every $1 that men make for the same job in any industry.
  • How does compensation relate to diversity, equity, inclusion (DEI), and belonging in organizations?
  • “Mercer estimated that 15%-20% of S&P 500 companies include DEI metrics in their executive incentive plans... Of those companies, 5%-10% have an objective, quantitative DEI metric.”
    • This is a surprising find for those of us who don't have extensive HR or People & Culture experience.
    • Is tying DEI measures into executive bonuses or compensation the best way for companies to show that they’re committed to DEI initiatives?
  • What current initiatives are underway to address pay gaps?
    • One suggestion is to first remove names, locations, etc. from applications. After you get a clean set of data, define the tiers and salary range for each title.  Salary should be based purely on experience and skill. 
    • Simply put, a pay equity audit compares pay rates for employees doing similar work and investigates the cause for any anomalies. Either consultants or people leadership can do this process.
  • What data can/should we be looking at to determine compensation best practices?
    • Addressing unconscious bias in resumes by keeping things simple and standard. 
      • Blind resume reviews - instead of looking at the name, only looking at a candidate’s experience to determine whether they are the right fit for the position. This levels the playing field.
    • Salary bands: Giving everyone with the same title or level equitable compensation (instead of negotiation)
    • Pay transparency: Publishing a pay range instead of saying “salary commensurate with experience"
  • What does equity look like in compensation? 
    • In DEI, equity means ensuring everyone has access to the same opportunities (General Assembly).
    • SHRM: To effectively recruit and retain employees, an organization must have internal equity, where employees feel they are being rewarded fairly based on performance, job skills, and other job requirements. Organizations also must ensure external equity in compensation and benefits with employers competing for talent in the same labor market.
  • Should pay reflect location?