How to Address Pay Equity

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by Dean Callaghan, C. Psychol., Ps.S.I, Managing Director at Aon’s Human Capital Solutions

Pay transparency regulations are emerging around the globe, reshaping how organisations approach compensation packages. These regulations mandate that companies provide greater disclosure regarding pay structures, salary ranges, and benefits. New regulations and standards will change how organisations attract, hire, and retain talent, and will also change how companies differentiate themselves against the competition

As these regulations continue to evolve, business leaders and HR professionals need to be prepared and make sure that they have a clear pay strategy in place that complies with the new standards but also prioritises fairness, internal alignment, and external reputation.

5 Point Pay Equity Checklist:

Reflect on these questions to ensure your company is going in the right direction with pay equity:

1. Is your approach to levels/grades robust, non-discriminatory, and supported by an analytical job evaluation/classification methodology?
2. Do you have clear guidance to support reward and promotion decisions that you would be comfortable sharing with employees?
3. What is your current gender pay gap and how can you improve it?
4. If you use performance management as a justification for pay differentiation, how robust and consistent is your existing approach?
5. Do you have enough market data to defend potential differences based on market premiums?

Global and Local Pay Equity Expertise

Pay transparency and pay reporting regulations vary from country to country. Multinational companies often have challenges with the regulations when it comes to a fragmented landscape. However, Aon’s global team of reward experts are here to help cover all industries and regions through this challenging landscape of practices and regulations.

Building Transparency in Pay Equity

Where you begin, depends on where you are on your journey. Below is Aon’s comprehensive approach which helps you transition from a reactive to a strategic approach.

Stage 1: Gender Pay Gap Reporting

• Reporting on the gender pay to comply with local regulations
• Analysis of various aspects such as payroll fields / employee definitions of gender and ethnicity / exclusion of codes and employees, classification of codes
• Results, methodology documentation, and action plans to address and close any gaps
• Support of internal and external communications

Stage 2: Pay Equity Analysis

• Use statistical modelling to compare pay for similar work while taking into consideration real business factors that drive and affect pay
• Identify job groups where protected categories are drivers of pay
• Create scenarios for pay adjustments based on the analysis of the findings and available budget
• A plan for short and long-term remediation of any pay gap
• Plan for internal and external communications

Stage 3 Equal Pay / Transparency Strategy

• Compliance with local transparency regulations and proactive action planning to continue and further enhance improving transparency and equal pay outcomes
• To fully embrace and incorporate transparency, reviewing Employee Value Proposition and Total Reward Philosophy
• Full change, implementation planning and ongoing governance, and review to maintain the evolutions required to deliver change

To learn more on how you can make better decisions around pay equity, get in touch with Aon’s Human Capital Solutions Managing Director, Dean Callaghan at [email protected].