A Multi-Dimensional Approach to Pay Equity

Recognizing Equal Pay Day

Today is Equal Pay Day and on the surface, it’s a reminder of how far we still have to go on the journey to workplace equality. It’s a day marked by dialogue and reflection on why, despite years of effort, the gender wage gap persists — to the tune of .84 cents on the dollar. More on that later on in the post. 

Today, we choose to move beyond reflection, advocating for a Multi-Dimensional Approach to Pay Equity. An approach that acknowledges the intricacies contributing to this issue and highlights how People Analytics can shed light on previously unseen patterns.

Keep reading for insights from the front lines of HR, business innovation, and sustainability. We’ll feature guest author Jaqueline Oliveira-Cella, a global health leader and alum of Harvard Medical School, as we examine the nuanced factors that contribute to the gender wage gap. Finally, you’ll understand how People Analytics, combined with this multi-dimensional approach, can help close the gap.

Understanding the Gender Pay Gap

At this moment, the gender pay gap remains a formidable barrier to equity in the workplace. According to recent Census data, women, on average, earn only $0.84 for every dollar earned by men. ‘’This gap widens to $0.78 when you look at all earners, including full-time, year-round earners + part-time and part-year workers,’’ according to Equal Pay Today. To drill down even further, Mothers make a mere $0.62 compared to Fathers, and so on. 

The gender wage gap has shown stubborn resistance to change in recent years, and behind the stark numbers lie the less visible forces of unconscious bias, discrimination, and outdated workplace policies that contribute to this inequity.

What’s even more concerning, is that only 5% of companies excel in pay equity, according to a study by the Josh Bersin Company and salary.com. 

To be frank, this isn’t a new issue, but its roots run deep into the history of the workforce. So how can we move beyond research and statistics towards progress? 

McKinsey’s Diversity, Equity, and Inclusion Lighthouse 2023 report identifies five common success factors across successful DE&I initiatives: 

As we outline the Multi-Dimensional Approach to pay equity, we’ll refer back to these DE&I Lighthouses from a framework perspective. 

Intersectionality in Pay Equity

These next two sections were written by, Jaqueline Oliveira-Cella, a global leader with more than 15 years of experience in health, employee benefits, and wellbeing. Here, Oliveira-Cella discusses intersectionality in pay equity,  how to address systemic inequalities, and why HR is a key player in driving not just inclusion but also happier, healthier employees. 

Over the past three years, we’ve witnessed the profound impact of social movements focused on education, awareness, and fostering a sense of community. Movements such as MeToo, Black Lives Matter, climate change activism, and the fight for equal marriage rights helped to expose societal and regulatory gaps and create opportunities for inclusion.

Companies have committed $9.3 Billion towards promoting DE&I in the workplace. Yet, only a handful have successfully created inclusive environments where underrepresented groups feel a sense of belonging, can freely share their ideas, and contribute the full power of diverse perspectives. 

In the US alone, 57% of employees quit their jobs and blame disrespect and unfairness as its root cause. (Pew Research – 2022)

In exploring ways to nurture equitable workplace environments, I present three straightforward principles for HR and people analytics: 

1. Acknowledge the Prevalence of Bias: Accept that biases, unfortunately, are common. Recognizing these potential implicit biases and prejudices is crucial. By identifying these behaviors and beliefs as fixed mindsets, we can interrupt the cycle that perpetuates through generations.

2. Embrace Diverse Perspectives Without Judgement: Listening openly to varying viewpoints fosters an environment of trust, respect, and introspection. This approach not only enriches the workplace but also contributes to the dismantling of systemic barriers to equality.

3. Be an Inclusive Leader: Demonstrating inclusivity and support sets a powerful example. As allies, we can significantly influence our workplaces by celebrating diversity and leading through action.

These principles are not just guidelines but essential steps towards achieving pay equity.

Beyond Diversity Initiatives: Addressing Systemic Inequities for a Healthier, More Inclusive Workplace

Organizations have invested in promoting diversity through revamped hiring practices, diversity training, and employee resource groups. However, they have often overlooked systemic issues such as pay equity, career advancement, and ensuring equal opportunities for everyone, regardless of background or identity.

What does it truly cost us to allow inequities to persist in our workplaces? Consider the impact: 

• Heightened turnover
• Diminished enthusiasm
• Stifled innovation due to a fear of taking risks
• Increased absenteeism
• Reputational damage

In today’s digital age, negative corporate practices are more visible than ever, with social media amplifying any misstep for the world to see.

Plus, the repercussions extend beyond the organizational level. Individuals who experience exclusion and a sense of not belonging are often engulfed in loneliness, exacerbating their isolation. This lack of connection has startling health implications, increasing the likelihood of premature death by over 60% — a risk comparable to smoking up to 15 cigarettes a day. Moreover, it’s associated with a 29% higher risk of heart disease and a 32% increased risk of stroke.

It’s not all bad, though. Recognizing these risks presents an unparalleled opportunity for change. By actively fostering inclusion and belonging, organizations get a unique opportunity to unlock a wealth of positive potential. ✨

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The Role of HR and People Analytics in Addressing Inequities

It’s clear to see that Human Resources plays a critical role in the corporate battle for pay equity. 

This function, traditionally seen as administrative, now bears the strategic imperative to weave equity into everything we do. CHROs must lead the way toward the structural changes necessary to eliminate bias and ensure fairness across all points of the employee lifecycle. 

Within HR, we’ve seen recent advancements in People Analytics signal a new era for pay equity. With its ability to dissect and analyze large sets of employee data, People Analytics can uncover subtle and overt patterns contributing to pay disparities. By using data visualizations and comparing the history and experiences of employees over time, HR can identify points in the lifecycle where these gaps start to emerge. From there, they can stop these inequities by crafting strategies to build more inclusive practices. 

Building a Strategic Roadmap for Pay Equity

Before diving into data, your organization needs to align on what pay equity means within the context of its business (see: McKinsey’s nuanced understanding of root cause). This involves setting clear definitions and benchmarks, legal buy-in, etc. Leadership and stakeholder alignment at this stage is critical. This is where you will lay the foundation for success and it’s a step that should not be taken lightly.

According to HR Executive, ‘’One of the biggest challenges for employers conducting comprehensive pay audits is that all of the information used in making pay decisions may not often be captured in HRIS or payroll databases. In such situations, collecting the relevant data can be very time and labor-intensive.’’

Suffice it to say that before you start a pay equity audit or any sort of pay equity initiative, you should be aligned on the goals, definitions, resources, and budget, all while ensuring stakeholder alignment. 

Once you understand the root cause, there are four key steps to building your pay equity roadmap: 

Step 1: Data Collection

Start gathering comprehensive compensation data across all employee demographics, including part-time and contract workers. Crunchr’s People Analytics tools offer capabilities to integrate data from various systems, ensuring a holistic view of pay practices. 

At the start, it’s important to get a baseline pay equity metric. You can do this by comparing the average full-time base pay for men vs. women.

💡 To capture a broader range of data on diverse groups, companies may also consider asking employees whether they identify themselves as part of “underserved groups”.

This voluntary metric can provide employers with a better understanding of the correlation between underserved populations and career progression, pay, inclusion, and equity.💡

Step 2: Rigorous Analysis with People Analytics

With data in hand, the next step is rigorous analysis. People Analytics enables employers to dissect data through various lenses—gender, ethnicity, age, YOS, location, and more. There are several ways one could approach this analysis including: 

• Attrition and promotion rates for employees returning from parental leave by demographics
• Absenteeism rates by gender
• Percentage of female hires for leadership positions compared to the current workforce

This allows leaders to identify patterns that lead to disparities such as differences in salaries, promotion rates, and performance ratings. 

For instance, a global financial services company utilized Crunchr’s analytics to dissect their salary data across gender lines, adjusting for role, tenure, and performance. They uncovered a systemic underpayment issue for women at the mid-career level, which was previously obscured by aggregate data analysis.

Step 3: Formulating Insights

Transforming data into insights is where the Multi-Dimensional Approach takes shape. This may involve identifying roles or departments with the most significant disparities and developing targeted action plans to address them. It could also mean re-evaluating job classifications, flexible work arrangements, performance criteria, and promotion processes to ensure they are structured equitably.

Step 4: Implementation and Monitoring

Oliveira-Cella writes, ‘’Recognizing the pay gap is just a starting point.  Next you should:

📈 Explore its causes by examining unmet needs related to work practices, remote work policies, health, wealth, and welfare offerings, skill development opportunities, as well as the state of trust, belonging, and inclusion.

📈 Engage employees where they are and collaborate with them. This will empower them to champion and embrace change

📈 Measure progress by setting clear benchmarks for pay equity, employee satisfaction, and retention rates. Roll out the planned changes, ensuring transparent communication with all employees about the reasons for adjustments and expected benefits. Establish key performance indicators (KPIs) related to pay equity, employee satisfaction, and retention rates.

💡 Also, don’t forget to regularly review these metrics to assess effectiveness and adjust as needed. Along the way, encourage ongoing dialogue with employees to sustain trust and openness.”

Cultivating a Culture of Equity

Cultivating true equity goes beyond policies and practices.

By nurturing a sense of belonging, trust, and joy within teams, you are creating a workplace where innovation and resiliency become the common denominator. 

‘’Investing deeply and methodically in diversity, equity, and inclusion is as crucial as focusing on any core aspect of our businesses. It’s time to elevate these initiatives from mere discussions to top priorities. By embracing and tracking inclusion with intention, we not only boost the unique contributions of each employee but also craft workplaces that are vibrant, healthy, and welcoming for all. We not only promote better business, but we create spaces where everyone feels valued and integral to our success,’’ concludes Oliveira-Cella.