No organization wants to get caught with an unjust pay gap.
About three-quarters (76%) of workers would consider looking for a new job if they discovered there was an unfair gender pay gap or no diversity and inclusion policy at their company, the ADP Research Institute (ADPRI) found in its report People at Work 2022: A Global Workforce View.
Of course, creating meaningful data about pay trends related to sensitive personal information is a monumental task. There’s no way to tease out discriminatory pay discrepancies without accurate data about the makeup of your workforce.
Pay is the most important entitlement that an employer provides to the employee. “The data that is used to deliver this entitlement is rich and should be harnessed to support diversity, equity and inclusion strategies,” says Ross Heron, COO at the Australian Payroll Association. “If organizations better understand their unique DNA, they are better positioned to engage their talent in a human-centric manner which can deliver safe, inclusive and innovative workplaces that drive wonderful work and life experiences.”
Specific diversity, equity and inclusion (DEI) efforts will be unique from company to company and from country to country. Your organization might want to be able to analyze pay trends based on:
- Gender and sexual orientation
- Race and ethnicity
- Social class
- Religion or belief or lack thereof
- Parental status
- Military veteran status
Most companies already have the information they need to determine whether there is a gender pay gap or discrimination based on age. However, companies don’t typically know where to start when it comes to measuring their gender pay gap.
One key consideration is: how do we measure gender pay equity?
Depending on the methodology selected by companies, the outcomes of the analysis can vary from “we are proud to say that there is no gender gap in our company” to “we have a significant gender pay gap issue”.
“It is therefore critical that the methodology used for measuring gender pay equity is the most suitable to the organization,” says Corinne Carles, Senior Director Total Rewards at ADP. “The first and foundational consideration is that salaries should be compared within groups of comparable roles. Companies can decide on their preferred level of granularity when considering the groups of jobs. Other important factors that may be used are work location inside the country or seniority in role.”
But it’s impossible to know whether there is pay inequity based on other diversity dimensions in your organization unless you measure it.
How to encourage voluntary self ID
Voluntary self-identification allows employees to anonymously share their demographical data and the social groups they identify with. This information helps the organization implement strategies that build a culture of belonging — which reflects the communities where they operate and the clients they serve — by measuring progress towards diversity goals.
“To ensure pay equity, the most powerful connection is to have self-ID and payroll information combined,” says Guadalupe Garcia, Senior Director, Inclusion & Talent Officer at ADP. “With self-ID, you can understand the demographical composition of your organization, look at how each of the groups are paid, and from there implement the strategies to bridge any existing gaps.”
To ensure that self-identification works, organizations must:
Explain how the data will help support DEI efforts in your organization. Candidates in underrepresented groups might feel uncomfortable disclosing their disability status, sexual orientation, veteran status, gender or racial identity. Employers need to proactively communicate the purpose for the request, how data is being collected, stored and how it will be used.
Adapt your questions for every jurisdiction: Some countries or cities might prohibit asking about certain dimensions of personal information. A legal adviser can confirm what your organization can ask in each jurisdiction.
Around 81% of companies are now consulting payroll data to inform their DEI strategies, a recent ADP study found. But 61% of organizations were too busy dealing with payroll queries to focus on more strategic initiatives.
For clients within the United States, ADP’s Pay Equity Explorer dashboard monitors aggregated pay trends to help identify potential pay gaps. Along with gender and race/ethnicity, pay averages can be analyzed by job title and geographic region to spot problematic trends.
Organizations pursuing DEI initiatives have to take a close look and use a fact-based approach to understand where they are falling short. Only then can an organization identify and rectify any pay gaps.
“You can’t say that you’re being inclusive and not consider the pay gap if there is one,” Garcia says. “You need to put in strategies to make sure that gap is reduced to nothing.”
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