In today’s tight talent market, commitment from an organization to promote equality for all can be a key competitive differentiator. Millennial talent, as well as other demographic groups in the workforce, are watching and making value judgments on how organizations craft their pay philosophy and practices. If those don’t sit well with employees, they may take their skills elsewhere.
In 2018, we’re seeing more organizations coming to terms with this reality and putting a focus on diversity and inclusion. In our latest Compensation Best Practices Report, which surveyed over 7,000 HR and comp professions on their pay practices, we found that 28 percent of organizations are planning to conduct a racial and/or gender pay equity analysis this year.
What’s more, top performers — those defined as the number one in their industry — are even more likely to report that they’re actively addressing workplace inequities than typical organizations around gender (35 percent vs. 26 percent), race/ethnicity (28 percent vs. 23 percent) and other protected classes (26 percent vs. 20 percent).
How Diversity and Inclusion Initiatives Impact Retention and Organizational Performance
Talent retention is higher when employees believe their employers are addressing gender inequities.
In a 2017 study, PayScale found that employees are more likely to look for new jobs when their employers do little to address workplace gender inequity. Seventy-two percent of employees who responded that their employers take no action against gender inequity said they plan on actively seeking new jobs in the next six months. In contrast, only 44 percent of employees who said their employers proactively address gender inequity issues plan on looking for new jobs.
In addition, organizations who focus on diversity tend to be more profitable.
A McKinsey study found that companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians, and those in the top quartile for gender diversity are 15 percent more likely. Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns, according to McKinsey.
Bersin by Deloitte found that over a 3-year period, diverse companies see 2.3 times the cash flow per employee compared to their less diverse peers.Diverse companies see 2.3 times the cash flow per employee compared to their less diverse peers.Click To Tweet
How to Promote Fair Pay Within Your Organization
If you’ve made a commitment to paying fairly, the first step is to evaluate your current pay practices with an audit. But before you do, it’s critical to get your executives’ commitment to rectifying any disparities that may be found during an pay equity audit.
Once you have support from your executives, you’ll want to conduct a pay equity audit. We’ve prepared the Pay Equity Action Plan to helps you get started. This guide tells you what to watch out for in pay equity, and how to examine your pay practices to ensure that you’re being both compliant and consistent with your stated values, company culture and business goals.
In addition to auditing your pay practices, you’ll also want to evaluate the opportunities you provide to employees in your organization. What’s the ratio of women to men in leadership roles, for example? How about in your higher-paying job functions? While this may not be a compliance requirement for your organization, demonstrating a commitment to equal opportunities will help you retain and attract talent in a competitive talent market.
Also, if you’re in the Seattle area in April, consider attending our Equal Power Day on April 10th. At this event, we’ll share the latest research on the gender pay gap and what you can do to combat gender inequity in the workplace.
Tell Us What You Think
What does your organization do to combat gender inequities? We want to hear from you. Share your story in the comments.
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