When it comes to ownership of pay equity analyses and process implementation, senior HR leaders and business leaders don’t agree, setting the tone of misalignment from the top. Yet, with 30% of HR leaders and 45% of business leaders looking to the CEO, and 25% of HR leaders looking to the CHRO, there is something we can all agree on; pay equity is business critical and as important as any other C-Suite priority.
Even still, while there are many stakeholders across organizations with a vested interest in achieving pay equity, Human Resources (HR), Diversity, Equity, and Inclusion (DEI), Sustainability, among others, without clear ownership and metrics of success when it comes to progress, accountability and alignment remains a significant challenge.
Breaking Down Organizational Silos
To solve for inconsistencies in ownership of pay equity, the critical first step is to breakdown organizational silos and bring together the key stakeholders responsible for fostering equity. Once identified, coming together to determine the roles, responsibilities, and dependencies of each leader is crucial to driving accountability.
While pay may have historically been perceived as solely an “HR Problem,” survey results show that’s simply not the case. Employee expectations, legal elements, and public reporting across sustainability and ESG themes sit as top drivers for transparency initiatives. This underscores the need to identify dependencies each team have on one another when it comes to progress.
For example, where a senior compensation leader is tasked with ensuring high performers are accounted for in the rewards process, talent management and diversity, equity, and inclusion are integral in fostering a culture where each individual has the opportunity to succeed, moving into the high performer status. Where we find leaders don’t see these connections, polarization ensues.
Understanding the key motivators of pay equity analysis, and ultimately the root causes of pay gaps themselves, will help identify when and where to bring in key stakeholders.
HR and Compensation
Human resource leaders and their teams are often the first tasked to conduct a pay equity analysis. With 52% of leaders saying employee expectations are the top driver for pay transparency in their organization, followed by 42% citing candidate expectations, it comes as no surprise that they own the analysis, with legal teams following suit.
Most importantly, these teams own the employee data critical to analyzing pay and equality practices. Yet, the barriers compensation analysts may experience today make it critical to involve additional stakeholders (FIGURE ABOVE). 52% of senior leaders say compliance remains a top challenge to achieving pay equity, 55% cite complexities in the analysis itself. This is where legal must step in to support efforts.
Legal and Compliance
The nuances of global pay transparency and equity laws and sensitivity around personal employee data asserts the critical need for legal and compliance teams to be involved in each step of the pay equity journey.
Not only are they able to advise on how to report, what to report, and when, they are a critical support in understanding how to effectively communicate pay decisions across the firm as well as publicly. They are responsible for ensuring that all pay equity practices achieve what they set out to do, ensuring all people are treated fairly, and mitigating any risks associated with pay inequity.
Diversity, Equity and Inclusion (DEI)
The main priority of DEI teams is to foster an equitable and inclusive workplace where all individuals have the opportunity to thrive. While this may be a shared goal across HR as well, leaders across DEI offer incredible insights into the individualized needs of employees, which in turn, allows HR to build more equitable strategies around policies, benefits, and rewards.
Holding DEI accountable for elevating the needs, concerns, and gaps that may exist among employees ensures a more robust approach to pay equity practices.
Sustainability and Environmental, Social, and Governance (ESG) Teams
Fair and nondiscriminatory compensation is an important factor within an ESG strategy. Many leaders from large organizations (69%), midsize organizations (71%), and small organizations (50%) agree that ESG/sustainability influences their organization’s pay transparency practices.
Not only does transparency drive accountability, but it also drives a company’s reputation, both internally and externally. Engaging ESG as an active stakeholder in your pay equity journey is critical when considering public commitments that may influence reputation.
Additionally, when it comes to public facing commitments, legal and compliance leaders may surely have an opinion. It is critical these teams remain aligned to mitigate any potential legal risks, and publish realistic, achievable goals in line with efforts put forth by HR.
Leveraging Cross-function Collaboration to Overcome the Data Gap
One crucial need to bring stakeholders together cohesively is to address the overwhelming data gap standing in the way of sustaining and scaling progress towards equity.
Although HR teams may own the employee data critical for a pay equity audit, 50% of senior HR leaders say they lack the employee self-identification data needed to run an analysis, 35% say they lack pay data altogether.
This is where we start to understand truly understand the critical interconnectedness of pay across teams. HR teams are struggling to obtain self-ID data, and there are many hypotheses we can make as to why. Most notably, fear of discrimination, or the idea that even if data is shared, the company won’t do anything about it, may prevent employees from disclosing.
But it takes data to make data, and robust, meaningful data is a critical first step in any analysis. In building an action-oriented stakeholder group, this is where we may turn to DEI leaders.
Self-identification campaigns are one of the many ways DEI may contribute to an overall pay analysis. By walking the walk, rather than talking the talk, employees may be more likely to self-ID, providing the critical information needed to truly make progress.
To sustain and scale that progress, the benefit of a technical pay equity analysis is not only to remediate, but to address the root causes of inequity and work to overcome them over time. By engaging DEI to address policies and practices overall, companies can start to fully foster a more inclusive culture, closing opportunity gaps before they even present themselves.
Sustaining and Scaling Progress
Leadership must treat pay equity as a strategic initiative requisite to attraction and retention of top-talent and the long-term success of the business.
Like all business plans, clear objectives, owners, and metrics of success, are the only way to ensure progress is made. Understanding the interconnectedness of pay equity and broader workplace equality initiatives further inform the ways key stakeholders must work together, with a clear definition of the roles they each play when it comes to driving progress. In doing so, the application of clear objectives, ownership, and metrics of success ensure accountability for progress moving away from performative behaviors towards truly sustaining and scaling equity.