These days more than ever, employers need to be able to explain their pay decisions to employees – and it should be as simple as equal pay for equal work. But, that concept is not the reality on many occasions.
How certain can you be that all of your employees are being paid fairly for their work based on their education, skills set and experience?
If there is transparency in a company, employees will feel like they are being trusted and treated with equal respect, and it will boost employee morale. Internal pay equality shows that the business is responsible and considerate towards employees, as well as improving retention of your top performers.
There are ways to notice whether or not you have an internal pay equality issue within your workplace.
Indications that there is pay inequality
- The company is lacking a formal system when it comes to evaluating and setting salaries.
- Negative feedback in regards to salaries and promotions.
- Audits reveal pay discrepancies among different ethnic groups and genders.
What can you do?
- You need a solid understanding of the different types of jobs that your employees are doing across all areas of the business, as well as the skills, education, and experience that is required in order to do so. This information will be what decides the internal pay structure – and you will need documentation to back it up.
- Look for some similarities within job roles.
- Be fair, ensuring that grouping systems evaluate each and every employee’s role and contribution. This will help avoid giving different job titles to employers that have the same job.
- An analysis on the external job market would also help know where salaries compared to some other companies in your industry.
- Use a reliable source when you are collecting external market pay information so that you can understand how your internal pay ranges for people in certain positions.
- Be sure that jobs are reviewed in your external market analysis and that they match as closely as possible – education, job location, and experience level to your current positions.
Keep in mind that the information you will be gathering should justify pay decisions to the leadership within your organization.
You will also need to focus on the compensation system, and you will need to search for any problems within this area such as pay differences that you cannot explain. For example, you could take advantage of technology and the different types of reports you can access through your own HR system. When you’re analysing the data drawn from your payroll software:
- be ready to explain: once you are aware of internal pay discrepancies you need to justify it and create documents to support these decisions.
- if there are errors, correct them: if you cannot justify changes or discrepancies, you will need to take steps to sort them out either by salary freezing or boosting.
You need to take the time to review your business’s pay equality. Demonstrating that you have integrity in this manner won’t go unnoticed, and your business is likely to grow from strength to strength.