Rachel Ernst, VP of Employee Success at Reflektive shares her tips on managing gender pay equity throughout the employee lifecycle – from onboarding through offboarding.
According to the 2017 US Census Bureau, women currently earn approximately 80 cents for every dollar that men earn. This equals about $550 billion in missed earnings annually. There is a lot of work that needs to be done to bring this in better balance.
Early on, men and women are graduating from college at the same rate. In fact, more women than men are completing college. They are entering the workforce at the same pay rates. But, over time, a pay gap begins to form.
To better understand pay equity and how inequity happens, Rachel uses a graphic borrowed from the educational system to explain. The picture shows three children standing on equal sized boxes but on varying ground levels, trying to see over a fence. The uneven ground symbolizes the differences in each person’s background. The fence represents the different barriers that each person has, for example, educational status, socioeconomic status, etc. The equal sized boxes signify that each person is eligible for the same amount of compensation from the same salary budget each year. The lesson explores what might happen if we change the size of the boxes to lift everyone up to the same level. While that helps for a time, the fence is still there and will lead to more equity issues over time. We need to work harder to remove barriers if we want to correct the problem permanently.
The decisions that are made throughout the employee lifecycle affect pay. There are many pay-related decisions made at milestones throughout the employee lifecycle. These milestones include:
- Performance Management
- Company exit
- Managing interview bias
- Create a diverse interview panel requirement for every job.
- Require a structured interview process for every role. Be consistent and attach the interview to specific skills. Avoid the “like” bias where interviewers give preference to candidates that they like.
- Provide interview bias education for recruiters and interviewers.
- Implement a “bias buster” – have someone dedicated to sitting in on interview debriefs to question comments or invoke further discussion when a potential bias is recognized.
- Avoiding bias at the offer stage
- If a candidate is asking far less than the approved amount, question whether this is a fair market-based rate, before just giving them the requested amount.
- Approve a budget for the role in advance
- Use market data to compare
- Check salaries of internal employees at the same level
- Consider geographic pay differences
- Consider competing offers
- Performance Management Stage
Take care not to make pay-related decisions that could be based on bias.
- Recency bias –decisions based on recent events rather than basing them on the entire period.
- Similarity bias – decisions based on the manager’s feelings that the individual is like them rather than how they are performing.
- Likeability bias – decisions based on how much the manager likes the employee, regardless of how well they are performing.
- How to ensure equal opportunities for promotion and compensations
- Calibrations – bring managers together to discuss their processes and finding a common way to determine performance.
- Ratings – can be a very specific way of defining performance.
- Gender analytics on promotion rates and increases – look at gender pay to ensure that pay and promotion rates are equal across the organization.
- Enforcing equity – leaders and managers should enforce equity among their teams.
- Compensation analysis twice a year, particularly in competitive markets.
How to do a gendered compensation analysis
- Benchmark all roles to market by geography
- Align everyone to their roles
- Include: last pay increase, last promotion date, tenure, gender, salary, level, manager, manager gender, analysis on all above factors by gender
Employee Exit Stage
Men tend to negotiate their separation packages more. Each situation is different but be mindful of keeping these as equal as possible.