Salary.com Introduces New Framework to Address Pay Equity
Equitable pay — and how companies arrive at individual compensation decisions for employees — matters a lot in today's business world.
An increasing number of regulations are governing how transparent companies need to be about their pay structure. In the US, 14 states have laws that prohibit employers from asking job candidates their salary history, and a growing number of governments, including New York City, now require employers to post a salary range for all open positions. That's not to mention the talent and recruiting benefits of having a competitive salary structure.
To help employers manage these new requirements — and do right by employees — Salary.com released the Plunkett Pay Equity Framework, a six-step methodology powered by data analytics that aims to help companies create and sustain pay equity.
"Pressure to address pay equity is coming from all sides — organizations must act now," Salary.com co-founder and CEO Kent Plunkett said in a press release announcement. "Pay equity requires a comprehensive solution that reflects what is happening inside and outside of a company and encourages transparent discussion on why people are paid what they are paid."
Salary.com, based in Waltham, Mass., has more than 8,000 customers using its software, and 30,000 organizations that participate in its surveys, comprising 45 million employees globally.
Broadening the Lens of Equal Pay
According to Salary.com research, nearly half of employees say they are underpaid relative to their counterparts at other companies. More than a third believe they are underpaid relative to their internal colleagues. When asked what companies should take into account when deciding fair and equitable compensation, external equity and internal equality were ranked first and second, with 87% and 76%, respectively.
"In today’s tight labor market, that is a major red flag for employers,” said Carol Ferrari, Salary.com vice president of product marketing, in an email interview with Reworked.
HR is feeling the heat. According to more than 700 HR professionals surveyed by Salary.com in December 2021, 65% said they are feeling more pressure than ever to address pay equity and 20% called the pressure “tremendous.”
Those pressures, alongside heightened awareness and advocacy around fair pay, have broadened the lens through which companies should view pay equity, Ferrari said.
"Often, it’s seen as equal pay for comparable work, which, while accurate, doesn’t encompass all aspects of the pay equity equation," she said. "We view pay equity as pay for comparable jobs that is internally equitable, externally competitive and transparently communicated."
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How Plunkett Aids Pay Equality Efforts
Solving the challenges surrounding pay equity requires a solution that takes into account what's going on inside and outside of the company and encourages people to talk about what they are paid and why, according to Ferrari. The Plunkett Pay Equity Framework is intended to guide a change from an "outdated" market-pricing approach to compensation to a broader pay equity approach.
"This shift to a pay equity philosophy will lead to a sustainable approach to pay equity that drives employee engagement and, ultimately, wins the war for talent," Ferrari said.
The Framework provides a series of steps required to address pay equity:
- Mandate pay equity.
- Group comparable jobs.
- Model internal equity.
- Benchmark external competitiveness.
- Communicate transparently.
- Update continuously.
"The Plunkett Pay Equity Framework stands apart because it guides companies on how to secure a leadership mandate to support a pay equity philosophy that drives employee engagement and wins the war for talent," Ferrari said.
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What's Next for Salary.com?
Salary.com previously launched a free Pay Equity Overview, available with its compensation management software, CompAnalyst, designed to help companies assess potential pay gaps in areas such as gender and ethnicity. Customers will now be able to fit the Plunkett framework into existing CompAnalyst and JobArchitect software workflows.
This is the beginning of pay equality software and data advancements that will be implemented through 2022, according to Ferrari. Salary.com updates its software monthly, and its data products are updated in real time.