Pay equity and transparency
Pay equity and pay transparency are quickly becoming essential requirements for organisations across the world — critical not only to maintaining legal compliance but also to attracting and retaining employees.
Mercer offers strategic alignment of your employee value proposition to ensure that your total rewards philosophy and programmes adhere to the principles of fair pay, supporting your pay equity and transparency goals.
People expect compensation that is market competitive, and reflects their skills, experience and contributions.
Moreover, they also expect pay that is equitable relative to their colleagues.
Eight steps to achieve pay equity
To achieve accurate pay equity, it's essential to take a comprehensive and continuous approach. Here's a step-by-step guide to help you start and maintain this journey:
Begin by identifying and analysing any existing pay gaps. This step lays the foundation for targeted action.
Work systematically to close any gaps revealed by your analysis. This includes reviewing and adjusting base salaries, bonus pool allocations, salary increases and promotion decisions to ensure fairness.
Look beyond just salaries and consider factors such as gender, ethnicity and age in your audits to ensure comprehensive equity.
Recognise that achieving pay equity is just the starting point. This doesn't fully address where pay should be based on individual tenure, experience, multiyear performance and skills.
Ensure your pay practices reflect your company's stated ideals about how employees should be compensated, especially when pay ranges become transparent.
Implement training for managers and establish guidelines around discretionary decision-making to maintain equity in starting salaries, pay raises and bonus allocations.
Introduce checks, balances and scrutiny before implementing decisions about new hire salaries, pay raises and bonuses to prevent perpetuating biases or inequities.
Apply the same rigorous review process to career advancement and promotion decisions to ensure they are fair and equitable.
Effectively addressing pay transparency
To successfully tackle pay transparency, companies should first assess and refine their job architectures, compensation strategies, salary structures, and pay equity initiatives. Transparency programmes must be carefully considered to align with your overall people strategy. By acting now to integrate pay transparency within broader total rewards programmes, companies can better navigate this complex landscape to achieve fair, sustainable outcomes.
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