Fundamental Fix #1 to Assessing Pay Equity – Flip the Unit of Analysis

How do organizations conduct their pay equity analyses? I would argue that pay equity is not analyzed correctly.  Let’s jump in and start with the unit of analysis. You are probably wondering what I mean by “unit of analysis”. A unit of analysis is the entity that you wish to say something about at the end of your study (evidence 1). What do we want to say something about? We want to say how equitably the women are paid compared to men.

The Wrong Unit of Analysis

Guess what. Organizations use the wrong unit of analysis. The “ownership” of pay equity falls to the governments around the world. Those governments require companies to report on the status of their gender pay practices for the employees that reside in their country. So, what does that mean? Consider a company with 150 employees in France and another 150 employees in the United States.  The pay equity analysis is done twice … once in France and once in United States.

Here are the problems when the unit of analysis is the employees within a country:

1. the different country analyses are not done the same way because there is no one standard for every country to follow
2. many times there will only be a few employees in certain roles within a country which makes quantitative analyses impossible
3. the ownership of who does the pay analyses gets dispersed to the different geographies, increasing the “check the box” mentality.

The Right Unit of Analysis

We need to flip the unit of analysis. The unit of analysis for pay equity should be the company. Period. Using our previous example, the analysis should be done on the total of 300 employees and we simply model any appropriate country differences. This solves all three of our problems:

1. the analysis will be done the same way no matter where in the world our employees exist
2. we will increase the size of the comparison groups allowing for more statistical analyses
3. we can have central ownership that can ensure a cohesive approach to understanding pay equity.

“It is always the simple that produces the marvelous.” – Amelia Barr

The solution is simple: flip the unit of analysis … have the company conduct a pay analysis for all employees no matter where they are in the world.

Evidence
1 https://scientificinquiryinsocialwork.pressbooks.com/chapter/7-3-unit-of-analysis-and-unit-of-observation/