How to introduce pay transparency to help close the gender pay gap

Lynne Marie Finn is President and CEO of Broad-leaveda WBENC certified provider of value-driven talent and workforce acquisition solutions.

COVID-19 has disrupted the lives of American workers, with 95% of the American population under stay-at-home orders at its peak. The massive layoffs and resignations that followed were heavily concentrated in female-dominated fields. This happened just as demands for childcare were increasing due to school and daycare closures. Called the sell-off, it was a period when millions of women left the workforce, accounting for nearly 70% of those who lost their jobs and leading to a loss of more than 1.4 million net jobs. When you combine that with the issues of caregiver support, the legal barriers created by labor laws written when men were the majority of the workforce, and skyrocketing inflation, women in the workforce are face immense challenges.

States and localities are combating these challenges by enacting pay transparency laws. Pay transparency benefits all workers, but is particularly important for women, as they experience the largest pay gap. WorldatWork defines pay transparency as “the extent to which employers are open about what, why, how and how much employees are compensated – and the extent to which they allow employees to share this information with others”. Pay transparency information can be provided voluntarily on a company’s website or in job postings, but more often than not, it’s only provided upon request once a candidate is well along in the process. hiring. Information that pay transparency laws may require to be disclosed includes “pay rates for specific positions, salary increases, bonus or commission structures, benefits, pension plans, or any other details regarding compensation “.

Laws preventing employers from asking job applicants about their salary history are also becoming more common. These laws help prevent past pay inequalities from worsening over the course of a person’s career. They support the position that compensation should be based on duties and level of experience, regardless of the candidate’s salary history or gender.

The benefits of pay transparency

Requiring employers to disclose what a job pays can benefit women in the following ways:

Closing the wage gap: On average, women are paid 82 cents for every dollar earned by men. Pay gaps and pay inequality have been shown to be reduced in organizations that use pay transparency. In fact, the gender pay gap could be reduced by 40% with broad pay transparency. A salary discrepancy can result from unintentional hiring manager bias and/or a lack of historical salary transparency. Pay gaps often start early in a woman’s career and then widen over the years when employers base the salary offered on an applicant’s previous salary. Additionally, research shows that most women negotiate their salary less frequently and vigorously than men. Disclosure of a pay range can reduce the need for women to negotiate and at least set parameters based on market pay rates.

Detect and avoid discriminatory remuneration schemes: Pay transparency is beneficial for both employers and employees, as it can help detect and avoid discriminatory pay schemes. When conversations about compensation take place in secrecy, it can be easier for discrimination and bias to factor into compensation decisions. When wages are accessible and transparent to all workers, women can more easily discern whether they are underpaid compared to their male colleagues. Pay transparency aims to help employers and employees avoid discrimination in discussions, disclosures, or inquiries about compensation, which could ultimately eliminate the current gender-based wage gap.

Increase women’s independence: With so many female heads of household, pay equity is a good thing for society. If women earn the same wages for the same work as men, they can better support their families. As a result, the number of children growing up in poverty may decrease and there may be less reliance on taxpayer-paid public assistance programs. Additionally, with equal pay, women may be better able to afford childcare, which helps them stay in the workforce and build their careers so that their pay keeps pace with men’s.

As more states and localities require employers to disclose compensation information, it is important that employers, applicants and employees are aware of applicable regulations and what must be disclosed to every step of the hiring process and during employment.

Actions you can take

Here are some steps you can take to close the pay gap and bring pay transparency to your organization:

Determine where you are and need to be. Where is your organization currently on the transparency spectrum? Where should it be for legal compliance?

Perform a pay equity analysis. Leverage salary analysis tools to assess your current compensation structure. Cross salary scales according to gender, ethnic origin, seniority, education, etc.

  • Do job descriptions contain rational education and experience requirements?
  • Are pay scales aligned with responsibilities? Have salary increases kept pace with changing responsibilities?
  • Are pay scales not in sync with experience, job title and seniority? For example, are new hires paid more than experienced colleagues or their managers?
  • Does your compensation structure have a disparate impact on protected categories of employees?

A pay equity analysis should be performed under the supervision of legal counsel to ensure legal compliance and protect solicitor-client privilege.

Establish or update your compensation policies. Establish and enforce clear and objective policies regarding the compensation structure and how raises and promotions are earned.

Be proactive. Even if it’s not legally required in your state, these actions can help close the pay gap:

  • Disclose pay scales in job postings
  • Train interviewers not to ask about compensation history
  • Ensure women have equal opportunities for training and advancement

As a Certified Women-Owned Business Owner, I understand the value women bring to the workforce and the challenges they face. It’s a sad commentary, indeed, that the Equal Pay Act of 1963 – giving equal pay to women – became law 60 years ago, but a significant gender pay gap still exists in the states. United today. Hopefully, over time, the transparency of pay information required by the most recent laws will reduce any pay gaps based on gender, race, religion, national origin, sexual orientation, age or disability. Equal pay for equal work seems like a long overdue fact.

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