Pay equity is a straightforward concept that promotes equal pay for work of equal value. While simple in its definition, its execution can be more complex. Pay equity, also known as compensation equity, requires an ongoing commitment from an organization’s leadership to implement meaningful change to its compensation structures, practices, and policies. It also upholds the principles of justice, equity, diversity, and inclusion (JEDI), and prioritizes employee well-being.
Pay equity breaks the culture of secrecy—regarding employee discussions about compensation—that has persisted for many years in the workplace. The reality is that not only are employees legally protected to discuss salaries, but they also actively share information and expect action and transparency from their employers. This includes providing staff with information on salary ranges; making the factors that determine pay, promotions, and salary increases available to all staff; identifying and communicating compensation inequities; and swiftly implementing remediation practices to correct pay disparities.
There are many steps organizations can take to address inequities in their compensation structures. First and foremost, an organization’s leadership needs to pledge its commitment to building more equitable workplaces that provide all employees with a thriving wage. While a living wage focuses on necessities, a thriving wage goes beyond necessities and accounts for savings and disposable income. This may mean offering salaries that are 50% or above an area’s living wage estimate, but at a minimum, organizations should provide their staff with a living wage.[1] The Massachusetts Institute of Technology (MIT) has a living wage calculator that gives employers a starting point for deciding staff salaries.
Another crucial step in the pay equity process is to draft and publish a compensation philosophy. Similar to a mission statement, a compensation philosophy drives an organization’s decision on the salaries and benefits it offers employees. A pay equity audit is also an invaluable tool that organizations can use to better understand their compensation structures, identify pay disparities, and rectify inequitable compensation practices. The STAR2 Center program at ACU, provides a step-by-step guide on how to conduct a pay equity audit as part of its recently published Pay Equity White Paper.
Organizations should also consider the following strategies when implementing pay equity practices:
- Provide salary ranges in job postings
- Assess current market rates and make any necessary salary adjustments
- Train managers to discuss salary and benefits with their direct reports
- End salary negotiations and the use of salary histories
- Understand the effects of wage stagnation on the United States workforce
- Educate staff on the compensation inequities, discrimination, and disparities minoritized groups face
- Regularly communicate with staff about the organization’s compensation decisions
- Build a culture of financial wellness centered on transparency and bidirectional communication
- Make pay equity a strategic and operational priority
Employees look to employers to provide them with financial literacy, wellness, and stability. Unfortunately, for many in the workforce inequitable compensation structures continue to keep them from their professional and personal financial goals. To this day, salary disparities persist among most minoritized, marginalized, and underrepresented communities. Organizations have the ability to make a fundamental change in people’s lives by providing them with thriving wages, inclusive benefits, career development opportunities, wellness initiatives, and more. These robust compensation packages provide employees with the ability to financially thrive while also helping employers improve their retention and recruitment outcomes. Simply stated, pay equity is here to stay, and employers need to answer the call.
For more information on all the topics discussed in this blog post, you can access the STAR2 Center Pay Equity White Paper, a detailed Health Center Pay Equity Checklist, and further compensation-related resources or view an archived webinar on Compensation Equity for the Mental Health Workforce specifically at www.chchworkforce.org. You can also contact us at info@chcworkforce.org.
[1] Nagarajan, M. (2019, December 9). Equitable compensation is a risk worth taking. Vega Mala Consulting.
