Chief Human Resources Officer, Exabeam.
It’s been said that sunlight is the greatest disinfectant. And when it comes to equal pay, a majority of America’s workforce is shining a bright light on pay practices. According to a survey conducted by LinkedIn, 81% of Gen-Z, 75% of Millennials and nearly half of Gen-X workers supported pay transparency initiatives.
While pay transparency might appear to be the newest trend, it’s actually a centuries-old tradition making a resurgence. If you’re a company leader looking to begin incorporating pay transparency practices into your organization, it’s first important to know how pay transparency came to be; what current legislation is in place; where it fits in the diversity, equity, inclusion and belonging (DEIB) puzzle; and where to start.
Pay Gaps Aren’t A New Phenomenon
Since the 1860s, activists and politicians alike have advocated for equal wages for equal work. A century later, women were earning around 60 cents to the dollar compared to men. While this has improved, the wage gap persists in 2023 with women typically earning 82 cents for every dollar earned by men. There’s also the significant, historical racial pay gap to consider. In 1979, Black men earned about 80% of what white men earned. In 2016, that figure slipped to about 70%. The gap also widened for Black women.
The pace for equal pay is undoubtedly slow and often undefendable. However, there’s hope that the current workforce will be the one to usher in another advancement in pay equality by demanding full transparency.
Pay Transparency Laws Are Increasing
As of early 2023, California, Colorado, Maryland, Rhode Island, New York and Washington are among the states that now require the inclusion of pay ranges in job postings. These laws aim to achieve pay parity across demographics like gender and race and establish more fairness in employment opportunities. It’s a noble cause and one very important to the next generation of workers.
With more leaders acknowledging the importance of these measures, we should expect that more states will follow. Especially with a more distributed workforce, these laws will have an influence on nearly every organization that operates in the U.S., regardless of industry. Mandating transparency like this may also be enough to encourage organizations to create real plans that address pay inequalities. By formally acknowledging the growing movement around disclosing the compensation for current and prospective job roles, it’s possible to minimize the gender- and race-based pay gaps.
Pay Transparency Is Part Of A Larger Picture
Of course, monetary compensation is only one of multiple ways to reward performance, promote fairness and build trust between employers and employees. Reaching a point of zero discrepancies in pay practice is a worthwhile goal, but it’s also important to embrace the “why” behind it all.
Pay transparency matters because it’s an integral component of inclusivity at work. When equally contributing colleagues are paid differently based on gender, race or other classifications, belief in a company’s commitment to inclusion goes out the window. Money talks, and the way business leaders choose to compensate their workforce says a lot about their genuine goals and priorities for the culture.
As organizations learn to build more inclusive workplaces, it’s important to realize the power of transparency in compensation. Everyone needs to know that their contributions matter just as much as those of the person sitting next to them. This is a critical piece of the corporate culture puzzle. Without authenticity in pay, how can employees expect authenticity in any other facet of the organization?
Start At the Beginning (But Don’t Stop There)
Organizations need to embrace the reality that solving pay equality begins at the recruitment phase of the employee lifecycle. For example, implementing structured compensation bands based on job competencies, then applying these bands to all candidates regardless of ethnicity, can help reduce disparities.
The same diligence can be applied to merit and promotion cycles. Organizations should aim to perform regular compensation reviews irrespective of gender, race or other classifications to promote fair and consistent treatment throughout the company and over time.
Today’s workforce craves authenticity and honesty, and I encourage leaders to support this by having open conversations about compensation. This is the best way to engage top talent on such a historically contentious topic. Despite its difficulties, pay transparency will lead to better pay equity for everyone.
Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?
Read the full article here
