How To Conduct A Pay Equity Analysis? Best Guide For Employers

Danish and Dipali are two fine employees working in the X company, but being in the same position, are they getting paid equally? To know the answer to this question only we are here! Because today we more often keep hearing about people having discussions around diversity, equity, and inclusion, and that is highly crucial to growth, hence pay equity analysis has become a vital practice for companies.

But if Dipali is not getting a sufficient amount of pay like Danish, and that too being in the same position, then how would the company be able to earn Dipali’s trust? It won’t right? Hence, to enhance employee trust and to create a fairer workplace, this equity analysis is a must!

Because that is how you as an employer should always make sure that you are paying equal pay for equal work of equal value! And if you are not, then you can obviously face ultimate hardships to retain top talents and promote a more diverse and inclusive company culture.

So, as an employer, what things you should keep in mind, and what factors you should consider, these aspects can be quite tricky to know! Hence, today we have come forth with the best guide specifically for employers, that will help you to walk through;

• How to conduct a pay equity analysis while ensuring that your process is transparent, compliant, and effective in addressing any pay disparities?

So, let’s start understanding all such crucial aspects, by first learning what is pay equity analysis!

What is a Pay Equity Analysis?

Pay equity analysis is a process, where we evaluate the whole organization’s pay structures, just so we can make sure that people working in the same position get the same pay! This process helps us to ensure fairness among the employees and eliminate bias, specifically related to gender, race, or other characteristics.

This analysis is based on focusing on the identification of employees, and whether or not they are receiving fair and equal compensation for their efforts. The primary objective of surveying the pay equity, and with the help of that we can easily identify any unjustified differences in compensation and take steps to correct them.

In your organization, you should not only be focused on the quantity or quality of production but also should be concerned about the pay gaps [if there are] and correct them. So, after getting details about the pay equity reporting requirements, let’s start understanding why you should need to conduct a pay equity analysis!

Why Should You Conduct Pay Equity Analysis?

Until now you probably should have understood pay equity meaning, but our human mind may have thought why do we need it, right? So, let’s provide this mind with some logical reasoning in terms of your pay equity and the cruciality of analysis!

Legal Compliance

As per the Equal Remuneration Act (ERA) of 1976, we really should maintain pay equity. And should keep no differences in pay between men and women, because keeping the difference between genders or any kind of imparity to pay equity is illegal!

Employee Satisfaction and Retention

The second aspect comes forth as employee satisfaction because it’s important to ensure that employees feel that they are fairly compensated. Because the unjustified pay gap is no good for your company, hence you have to make sure there isn’t one! For that reason, your analysis of the audit of more than a year can significantly boost employee trust and reduce turnover rates.

Attracting Top Talent

Pay equity in HRM specifically in the competitive job market can really attract better talents! Hence, you should prompt fair pay practices, so you can differentiate yourself as a company that values diversity, inclusion, and equity.

Closing the Pay Gap

Closing the wage disparity between race and gender for equivalent labor is one of the main objectives of frequent pay equality surveys. Because for example, however, if you look at the situation, from both internal and external aspects it’s just unjust! For equal work and equal pay, many companies are focusing more & more on reducing this gap as part of their broader DEI initiatives.

Why Pay Equity Matters More Than Ever in 2024

Whether you have your pay equity analysis template or not, it has become more crucial than ever. And with people getting more focused on pay transparency and fairness, pay equity analysis is becoming more and more important to conduct!

On that note, we can say that salary equity without the gender pay gap has been pushing companies to take proactive steps toward addressing such crucial issues of pay disparity. And when we talk about 2024, it’s time to use highly efficient HRMS software for better workforce management.

So, when we have such fine software to help us in the company operations, then we have to be more focused towards the relevant pay, and a better company culture! Furthermore, if we talk about the employees today are more likely to seek a clear transparency in compensation, which means companies that tend to fail to address pay equity risk losing their competitive edge.

Steps to Conduct a Pay Equity Analysis

So, after a detailed explanation to pay equity and a complete analysis of it, we are here to help you do the whole procedure by yourselves. Here, you just have to follow these 6 steps and then you will your analysis of such kind, so, let’s start right away!

1. Set Clear Objectives

Before you begin your analysis, it’s crucial to define all the objectives quite clearly. Like what is your objective behind this, are you aiming for legal compliance, or are you just addressing a gender pay gap, or do you want overall employee satisfaction?

Once, you have set such goals of equal pay for your organization, then you are one step forward in achieving desired outcomes.

2. Data Collection

Gathering accurate and comprehensive data is highly crucial for an effective analysis, so for that, you’ll need to collect information such as:

• Job titles and descriptions
• Employee demographics (age, gender, race, etc.)
• Starting salaries and current compensation
• Promotions, bonuses, and benefits
• Performance ratings
• Market data to benchmark salaries externally

Your analysis will only be as strong as the data you have collected, hence, it’s important to gather as much relevant information as possible. And here comes the role of HRMS tools and payroll software because they both can simplify the data collection process by simple automation.

3. Group Comparable Jobs

The next step is grouping jobs that require similar skills, responsibilities, and experience to do comparable work! Here, through the analysis, we can easily determine roles within the same level and responsibility to see if there are unjustified differences in compensation.

For example, comparing a customer service representative to a sales rep to more may reveal significant pay disparities based on role or gender race, which need to be evaluated.

4. Conduct Statistical Analysis

After getting all the data, and grouping, you need an internal pay equity analysis tool. So you can identify any potential differences in pay that cannot be explained by legitimate factors like experience or performance. By conducting this analysis, you can detect any potential pay disparities and take action accordingly.

5. Identify Pay Disparities

After conducting a pay equity statistical analysis, now you need to identify any potential gaps in pay! And look closely, because these pay disparities could be based on gender race or other factors that point to unconscious bias within your organization.

6. Take Corrective Action

Once these potential disparities are identified, now it’s time to develop a plan to correct them. And the correction may involve raising salaries for underpaid employees or aligning well the bonus structures. Furthermore, you may also need to review your hiring and promotion practices just so you can prevent any future pay gaps.

And once, you have taken the corrective actions, your company will be a fair and inclusive workplace. And the internal and external reviews of such kind will make sure to keep helping you maintain pay equity in the long run.

Leveraging Technology for Pay Equity

Hopefully, here we don’t have to say a word about the ultimate helpfulness of highly needed technologies, like HRMS software! Here, the data crucial data [that you will need for the analysis] is stored safely, moreover, the software will also help you automate much of the statistical analysis needed to identify pay gaps.

These systems help organizations conduct regular audits, monitor trends, and track compliance over time. And one of such finest HRMS systems on our list is Superworks, that have excellent features of HR analytics and documents, and with these, you can make as many as such reports as you want.

Furthermore, here you get a direct integration of Super Payroll for seamless payroll processing. With Super Payroll, you don’t even have to stress about legal compliance because it’s already handled through automation. And that is how you can be at ease, because now with Superworks, you can seamlessly promote fairness in compensation across all departments.

So, when are you booking a free demo to know many more details about the ultimate benefits you can get with this amazing software?