08 Sep Pay Equity Audit: Results and Implementation
By: Susan Kreeger
As discussed in Part I, What, Why, When, and How to Conduct a Pay Equity Audit, Pay Equity Audits are garnering increased attention by many organizations in order to look at pay through the lens of equity and fairness in the workplace. Here, Susan Kreeger, RealHR’s founder, and CEO, and Jennifer Loftus, Founding Partner and National Director of Astron Solutions, a total rewards and talent management consulting firm, follow up that conversation with a discussion on how best to understand and implement audit results.
While a Pay Equity Audit may be a one-time event, addressing the results and implementation are long-term with the goal of making systemic change. When looking at pay, it is the end-product of so many other HR activities—hiring practices; establishing pay grades and ranges; managing the performance review process; rewarding certain roles more highly than others; recognizing turnover and retention. Implementing pay-related changes in an organization will inherently reach deep into the organization, requiring careful consideration of who is involved in the process, how to make meaningful changes, and when and what to communicate to employees.
- When should an organization communicate to employees that it is conducting a Pay Equity Audit?
Let’s look at two situations for responding to this question. If there are no specific underlying issues for conducting the audit, an organization might do the audit work first and then communicate results to employees. If the audit is a result of general or specific complaints of unfairness in the workplace, the organization’s leadership might want to demonstrate to staff that they hear the concerns and are going to look at pay equity within the organization. Culture will also influence the decision about when to communicate information—some cultures are very transparent and will share the information upfront.
- How do you present your results to the client?
It is critical to have legal counsel involved with the process from the start so that you can have open and honest conversations that are protected by the attorney-client privilege. Counsel should be involved in presentations and conversations throughout the process.
Typically, the results of the audit are presented to leadership including the head of HR, the CEO, and legal counsel. In the report, Astron will address the methodology; overall findings highlighting what looks good and red flag issues to address immediately; recommendations for action; and supporting appendices with statistical information.
- How transparent should an organization be about the results of the audit to its staff?
Three things come to mind—culture, legal advice, and what are the findings. If the results are very individual, the results typically stay private. If the results are organization-wide, let people know about the general results and what the organization plans to do. Look at Pay Equity Audit results broadly along with other DEI initiatives. While we might believe that in an ideal world results could be transparent with employees and external clients, reality says defer to legal counsel on this topic. When the results are more positive, organizations are more inclined to share the information.
If the results are negative, it’s okay to admit that you haven’t lived up to your standards or that the standards have changed. The goal is that the organization is correcting, making positive changes. This can give everyone comfort—employees want to work there and people want to do business with you. With systemic problems, be truthful but careful.
- Can you walk us through the process if you find that remediation is required?
An organization might start with consideration of the volume of change–are there a handful of changes or is it more systemic? Also, how to manage the financial impact of making changes.
Some adjustments might be made immediately to correct serious inequities. Other adjustments can be mapped out over time. You can bring a salary or salaries to equity over three or six months. Also, consider having someone in management speak directly to the employee or employees impacted. Typically, the discussion would be with HR and possibly their manager as well.
- How might an organization handle remediation if its budget does not allow for salary increases?
Here are a few ideas:
- Freeze or slow down higher-level pay
- Consider giving bonuses or variable pay—that might buy you a year or so
- Look at where else to cut the budget
An interesting consideration for non-profits is to bring in your Development Department for donations. As an example, Astron recently conducted a review of pay ranges for an organization where the results raised budget issues. The Management Team knew that raising money for this would resonate with their donors and funders by making a direct appeal.
- How significant is the prevalence of social media and widespread sharing of information to the decisions around transparency?
Social media can be a friend or foe. There are probably more concerns about Glassdoor reviews where people go to find salary information, not as much on Facebook or Twitter. Take what people say with a “grain of salt.” There is not much an organization can do to control what is said. There are first amendment and freedom of speech rights for an individual. Look at how to manage what is said. That said, you can’t ignore what is said on social media. Listen to general themes. Is there some truth to what is being said? Is there a call to action that you need to pay attention to? You might consider bringing in your marketing or communications functions if there are social media concerns.
In some situations, employees decide on their own to reveal their salary information. This can happen on social media. But this more often happens around the “proverbial water cooler,” other communication modes in today’s world. Often, individual salary information is understood out of context—someone needs to consider performance, education, and skill level, among other factors, when assessing salary. It’s important that an organization is clear and transparent with its employees about its overall compensation philosophy.
- What are the ways that a pay equity audit supports DEI in an organization?
There are three major areas to consider:
- It’s critical for an organization to address inequities and imbalances in pay. Correcting this must support the commitment to DEI. So much of someone’s sense of themself and self-worth is tied up in how fairly they are paid.
- Statistical problems reveal a lack of diversity. If you keep coming back with the problem that there are not enough people in a protected class for an accurate statistical analysis, your real issue is probably with hiring or retention.
- Correcting imbalances to address HR practices. Making sure that programs live up to the expectations of equity for all. Pay Equity Audits allow an organization to show that it is “not just talking the talk but walking the walk.” If an organization believes in something, it will find the money to show a true commitment.
- What are some final thoughts?
We have just scratched the surface. There is so much to be discovered and unearthed with a Pay Equity Audit. Some of the findings may be what we suspected, and some may be surprising. We are committing to this for the long-term, for the good of our employees, our organizations, and for the larger society as well.