Pay equity has several benefits for companies. First, it demonstrates to employees that their work is valuable, improving team morale and overall job satisfaction. Research has shown that 82% of workers who are paid equally report that they are more satisfied with their work and feel more loyal to their employers. Additionally, pay equity helps businesses to avoid negative publicity, which has been proven to hurt revenue. According to a study, nearly two-thirds of consumers will not buy products or services from a company that does not show that it values its workers.
Impact on business performance:
What is the importance of pay equity – ADP? Pay equity is an important issue for companies. But, even if it’s not an issue for your organization, you can take action to close the gap. The first step is to identify where there are disparities. Then, conducting an audit will help you identify potential opportunities for improvement and determine whether discrepancies are justified.
When a company pays its employees equally, it fosters employee engagement and retention. This way, employees can focus on their work and feel valuable to the organization. In addition, it will also show that the organization values its employees and is committed to them. While this may seem small, it can lead to tremendous results.
Recently, companies have been under increased scrutiny for pay equity by shareholders, state legislatures, and institutional investors. These new forces have increased the responsibility of boards to play an important role in a company’s compensation. For example, the National Association of Corporate Directors (NACD) recommends that boards review compensation plans regularly and identify problematic programs. The SEC has also suggested increased disclosure of workforce data.
Transparency is the latest trend in pay equity:
Transparency in pay is a way to close the persistent wage gaps in the United States. Women of color, in particular, are affected by these gaps the most. In addition, employers can use pay transparency to attract and retain workers while satisfying regulatory requirements.
While pay transparency can be stressful for some, it is a necessary step in creating an equal workplace. For one thing, it makes it more difficult to pay people unfairly. In addition, a new study shows that employees tend to apply for jobs with pay information readily available.
Work of equal value:
Work of equal value is the principle that equal pay for equal work should be applied to both men and women. The ILO first defined it in 1919. The Equal Remuneration Convention of 1990, ratified by 90% of ILO members, reinforced the principle of equal pay for equal work and prohibited sex discrimination. More recently, the ILO issued several guidelines and documents that specifically define “equal work” even if the two jobs do not have the same qualifications.
Some occupations, for example, are dominated by one sex, such as nursing or mining. If the pay gap between males and females is too large, it can hurt a company’s revenue. That’s why organizations should carefully consider the criteria for classifying jobs to ensure that the pay reflects work of equal value.
COVID-19 causes lower wages for working women:
COVID-19 has ratcheted up the pressure on working women. One in four women lost their jobs last year, citing the need for childcare, and a recent survey shows that losses aren’t decreasing. Last year alone, 2.2 million women with children under 12 lost their jobs—and more than 870,000 men lost their jobs.
This recession is particularly harsh for women. Their unemployment rates were up 12 percentage points between February and April, while men’s unemployment rates increased only slightly. And their losses were even greater for those without college degrees.
The cost of not implementing pay equity:
A key element of pay equity is assessing your employees’ pay across different job classifications. For example, an organization can take five or more job classifications in a small-scale test run and compare their compensation levels. Once the results are determined, the organization can determine the next steps. For example, it may decide to implement merit-based increases.
The cost of not implementing pay equity is higher for organizations that place a high priority on merit-based pay. Unfortunately, many organizations fail to monitor their employees’ behavior, which can lead to complacency. For example, a Glassdoor Economic Research study showed that nearly three in five people interested in a position at a company that fails to implement pay equity would not apply for the position.