Cost of correcting inequities cited as greatest
barrier to achieving pay equity
LOS
ANGELES, July 23, 2024 /PRNewswire/ -- Companies
are likely leaving themselves open to expensive penalties and
lawsuits based on their pay equity practices, according to a new
report from workplace equity technology company Trusaic. The
research from the "2024 State of Pay Equity Policies and Practices"
survey sheds fresh light on how organizations are handling pay
equity and the emerging risks they face. It also highlights
practical steps to bring fairness to all forms of compensation. The
study is a joint project of Trusaic and Empsight, a leading
provider of specialized compensation data for Fortune 1000 and
large multinational companies.
Key takeaways from the report include:
- While companies are increasingly more diligent about monitoring
the fairness of base pay, their vigilance has not extended to other
forms of compensation: short-term (e.g. annual bonus) and long-term
incentives (e.g. restricted stock, stock options). Many industries
emphasize these as an important part of their compensation
strategy, but few include them in their pay equity analysis. This
can lead to hidden inequities. Only 13% of organizations studied
consider long-term incentives when doing pay equity analysis,
and only 24% include short-term incentives in their pay
equity analysis.
- Over 40% of organizations use a relatively unsophisticated
approach to pay equity analysis, focusing on median or average
pay, but ignoring relevant variables that drive pay differences.
This can lead to mismeasurement of pay inequities. The gold
standard for pay equity analysis is to use multiple regression to
account for relevant factors that impact pay.
- The most commonly cited barrier to achieving pay equity is the
cost of correcting inequities that are identified. This fear is
misplaced, notes Trusaic, because even when resources are
limited, there are ways to make progress on addressing pay
inequities.
- 44% of respondents conduct a pay equity analysis once every
two or three years, on an ad hoc basis, or not at all. This
creates unnecessary risk. Hidden pay inequities can grow, leading
to large remediation costs, as well as the potential for incurring
back-pay liabilities in the case of a lawsuit. The best practice is
to remediate pay inequities annually and monitor pay equity
throughout the year, either on a quarterly or semi-annual
basis.
- Fewer than half of the respondents report doing a pay equity
analysis examining inequities based on age. Given the increased
interest in age discrimination, this is an oversight Trusaic
recommends correcting.
"We were inspired to conduct this research, because our
experience suggests there are still some serious gaps in how
organizations conduct pay equity analysis," says Robert Sheen, CEO, Trusaic. "Companies have an
ethical imperative, a legal imperative, a business imperative, and
a compliance imperative to get pay equity right. This can only be
addressed by ensuring their pay equity programs cover all forms of
compensation and use the appropriate analytical approach."
Empsight gathered data from compensation professionals at 256
large organizations, between February and April of 2024. The study
provided a comprehensive insight into their pay practices and how
they approach pay equity analysis. Survey participants included
many large organizations, with 45% having over $5 billion in revenue. The study covers a wide
range of industries and includes public, private, and
not-for-profit organizations
About Trusaic
At Trusaic, we're on a mission to
empower organizations to create a more equitable working world for
all. We champion human potential through our industry leading
technology platform and first-to-market partnerships and
integrations, enabling organizations to achieve pay equity, foster
a more diverse and inclusive workforce, hire economically
disadvantaged individuals and ensure employee access to affordable
healthcare.
About Empsight
Empsight International, LLC is a human
resource consulting firm which helps employers make better
decisions about their investment in people. Empsight's compensation
surveys enable Fortune 1000 and large multinational corporations to
benchmark their critical functional areas against other relevant
peers. Our surveys are seen as definitive data reference sources in
markets where such information is critical to maintaining
competitiveness. Our Principals and staff have significant
experience in consulting on compensation, organizational and human
resource issues across multiple industry sectors.
Contact:
Matt Gotchy
(213) 814-5760
380740@email4pr.com
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SOURCE Trusaic