What is Relevant Information When Assessing Pay Equity?

My colleague Debra Logan and I are challenging the way that pay equity is prioritized, assessed, and remediated around the world. In my March 8, 2021 blog on “Why Pay Should Be Based on Performance” I made this statement: “all things being equal, women should be paid commensurate with their performance in their role and if their performance is equal to a male counterparts, then they should be paid equally”. Today I want to explain “all things being equal”.

What should be part of “all things being equal”?

Here are the variables that should be part of a pay equity analysis, at a minimum. Organizations can make decisions about other variables that might make sense given their business and stated pay policies.

These first variables are the ones you need to do the analysis:

• Pay – this is what you are trying to predict; pay should include salary + any bonuses that are paid to individuals based on organizational performance
• Like for like role – this is what you group employees together on; you want to compare employees that do similar roles as you would expect (all things being equal) that they would be paid similarly
• Gender – this is what you hope does not predict pay; seriously, because if it does predict pay, then your pay is discriminatory

These are the “all things being equal” variables. Now, of course, they will rarely be equal. And that is the point … there will be differences in these variables cross your employees and you expect them to have an impact on pay:

• Performance – it makes sense that your higher performers make more
• Experience – it makes sense that your employees who bring more experience into their role make more
• Time at company – it makes sense that someone that has been in your organization for a longer period makes more
• Time in role – it makes sense that someone that is more senior in the role makes more
• Country – it makes sense that employees in some countries make more
• Market differentials – it makes sense that employees in some in-country geographies make more (because of cost of living)

What could be part of “all things being equal?”

Many other variables could make sense to be included in your analysis. But they should only be included if they are based on intention … you intend to pay differently because of:

• Education – we choose to pay someone with an advanced degree more
• Rehire – we choose to pay someone who has worked with us previously more

This is not an exhaustive list, but examples of intentional pay practices that may or may not make sense given your organizational choices. But they should be applied equally to men and women. “All things being equal” means that we need to fold into our analysis the ability to understand pay differences that are explained by variables that we have designed into our pay practices.

In two weeks, I am going to talk about what type of analysis make sense for pay equity and allow all these variables to be part of the analyses.