Classified Id: 579691

Classified Title:

Category: Jobs:: HR     

City: All     Locality: Mission Viejo

Date Listed/Updated: 2020-06-18

Author/Publisher name:

Description: The COVID-19 pandemic has created ambiguity for some organizations over whether to stay the course on their regular pay equity assessments and resulting remediation actions. To date, all of the companies Mercer works with to promote equity are continuing their work; however, many organizations are questioning whether and how their focus on pay equity can hold up, as they face a new imperative to focus on operational issues and cost containment or reduction. Pay Equity Is On the Rise Six years after Mercer’s original When Women Thrive research report, the company released a significant 2020 update showing a sizable increase in the percentage of organizations conducting pay equity analysis: up from 35% to 56%. The increase reflects what has been a growing commitment of corporate leaders to achieve pay equity, as well as continued pressure from governments and activist investors for proactive management of pay equity and disclosure of relevant statistics. In fact, Arjuna Capital just released its third Gender Pay Scorecard, which grades companies for their achievement of equity and their transparency. It also cites pledges by many to complete annual reporting and related efforts concerning diversity and inclusion. The commitment by these companies to rigorous, global review performed on an annual basis — and embedded in the annual compensation process — represents important progress achieved on this issue, for the companies and for society. The Value of Statistical Modeling Rigorous pay equity assessments identify employees who appear to be underpaid as compared to “similarly situated” coworkers, based on estimation of statistical models of pay that account for the multiple factors that legitimately influence pay (not gender or race). These models produce predicted pay levels for each employee that companies can use as a benchmark for their actual pay. Employees are considered underpaid if their actual pay is less than their predicted pay, beyond a range defined by statistically determined confidence intervals. All too often, those identified as underpaid — what we call “negative outliers” — are disproportionately female and/or not white. So, remediation efforts that make pay adjustments for negative outliers can help organizations make progress on reducing overall gender and/or racial pay disparities. Organizations that do this work routinely budget for these pay adjustments beyond the annual merit increase. Threat Posed by the Current Crisis It is difficult to implement pay increases to correct for inequities when, for many, pay increases of any kind are off the table and furloughs or layoffs have either taken place or are under consideration. So what should organizations do under these circumstances? The authors advise focusing on four areas of action: Continue to assess the risks. Progress earned over the years from significant investments to eliminate gaps and preclude such gaps from reemerging can be quickly lost if consistent monitoring of pay equity simply stops. We know that the very process of pay equity evaluation itself can be a broad deterrent to discrimination. Mercer’s 2015 When Women Thrive research showed that those companies with rigorous, regular pay equity review processes were more likely to have equity across employment practices — in hiring, promotion and retention — leading to greater workforce diversity. Lowering the review standard, even for a year, can lead managers to question the organization’s continued commitment and create longer-term, broader challenges. A resurgence of inequities could result. Scale the response where budgets are limited. Where disparities are identified, actions (generally, pay adjustments) should be considered; however, such actions can be phased in over time, with a short-term emphasis on maintenance of position over progress. Robust pay equity processes are repeated annually, providing opportunity to accelerate further when budget dollars are again available. Consider new opportunities to counter gaps. In the current crisis, pay reductions will be a reality for many. Given that reality, why not push the pay reductions (in the form of salary or bonus cuts) to those who are already “overpaid”? Mercer’s work over the years shows clearly that a focus on the overpaid, commonly a population with a high representation of men, can dramatically accelerate progress in closing overall pay gaps; indeed, it may be the only way to close them fully.