Although pay equity and transparency matters have moved up the corporate agenda, new research has found that there are significant gaps in perceptions around pay equity between senior leaders within an organisation and their overall employee base.
Research from XpertHR and Executive Networks revealed that 75% of business leaders believe that their company prioritises pay equity. However, less than half (47%) of their employees agree. The survey, of more than 1,000 HR leaders, business leaders and employees across the US and UK, indicates that half (45%) of employees think pay inequalities exist within their company.
However, there are varying levels of confidence in how effective their organisation is at achieving pay equity. Business leaders are the most confident (77%), followed by HR leaders (69%), while employees are the least confident (50%). Furthermore, the research found that seven out of 10 leaders (71%) believe that current pay transparency practices are effective. However, only 39% of workers agree.
Leadership confidence in these pay equity efforts is perhaps driven by an understanding of the possible ramifications of pay inequity to their organisations. Almost half (47%) of HR leaders noted that inaction leads to reduced employee retention. However, 44% of business leaders highlighted that it can lead to reduced productivity. Conversely, if action is taken, businesses can reap many rewards. For HR leaders, the biggest advantage is improving diversity, equity, and inclusion in their workforce (54%). Business leaders, on the other hand, are focused on increased employee productivity (47%).
PAY EQUITY & TRANSPARENCY MATTERS
The study also found that pay transparency initiatives were largely driven by employee expectations (52%), candidate expectations (41%), and the belief that pay transparency is the right thing to do (41%). With businesses understanding not only the societal importance of having pay equity, but also the strategic business impact that pay equity brings, senior leaders are being brought in to lead the charge. Almost half of business leaders (45%) say that the CEO should be responsible for leading pay equity initiatives. However, senior HR leaders are significantly more likely to say the CHRO should be responsible (25% compared to other business leaders 14%).
“With increasing regulation and the social data spotlight turning towards pay transparency in the US, employees have been empowered to advocate for themselves, and more specifically, for the pay they deserve. More than just the right thing to do, pay transparency and equity is business critical,” stated Sabina Mehmood, Pay Equity Leader at Gapsquare, part of XpertHR. “Encouragingly, we are now starting to see more initiatives coming to the forefront as businesses look for ways to tackle the issues head-on. But, there remains a lot of talk around pay equity. While business leaders may feel like they are walking the walk alongside this talk, the results show this may not be the case. To evolve pay practices beyond being a tick-box exercise and progress toward a human-centric, strategic approach, businesses need to remove the cloak around this issue and open up to their people on pay.”
BUSINESS CASE FOR PAY EQUITY
Jeanne Meister, EVP of Executive Networks and author, agreed: “Pay equity is moving up the corporate agenda. And HR is beginning to understand it’s growing beyond a DEI matter and evolving into a core pillar of a business’ strategic ESG plans. For HR leaders, this should be a welcome development. There is now a clear business case to be made for pay equity to get Board level input and investment required, but employees need to be brought along this journey, too. Here HR can shine, bridging the gap between leaders and employees, and moving the entire organisation to more transparent and equal pay.”
To download the 2023 Pay Equity and Transparency Study, click here.
RELATED ARTICLES
Most companies are still failing to achieve pay equity, a new study has revealed.
Sign up for our newsletter
