When examining the labor market today, it’s hard not to talk in terms of pre- and post-pandemic when the human cost of the crisis was so significant. Economic and social impacts were uncovered, including pay inequality. The pandemic led to the biggest change in labor practices since World War II. During the initial response phase, collectivism thrived as we were united by a common sense of survival. Employees adapted to working remotely, willingly being redeployed into new roles, acquiring new skills and some even took pay cuts.
Now, as organizations assess what lessons can be learned from recent years, prioritizing a fairer workplace for all needs to be an integral part of the new normal. The following are actionable starting points for your organization to consider.
1. Consider how all employees can share in success
When building new frameworks for managing human capital, it’s critical that we consider how all employees can share in success. This can be achieved by building on the feeling of collectivism that has emerged from the crisis and has led to a rise in employee engagement and productivity.
2. Practice looking through the lens of equality
It’s essential to keep equality top of mind when introducing new working arrangements and consider if every employee will benefit in the same way. For example, if you are adopting hybrid workforces, consider the following:
- Perform pay equity audits and identify vulnerable moments in the talent lifecycle where inequity occurs
- Disaggregate data to understand the nuances and outcomes for different groups and detect gaps between policy and practice
To move beyond anecdotal evidence and subjectivity, employee data must be analyzed. Analyzing this data will allow any inequality to be properly measured and provide your organization the information it needs to take corrective actions.
3. Aim for even greater pay transparency
When pay policies are more complex and less transparent, they become more vulnerable to pay inequities. Yet, employers still feel uncomfortable disclosing pay frameworks. The reality is that if your processes are fair, you should have nothing to hide and the right pay framework should be easy to explain because it obviously aligns to how you attract, retain and reward talent. In the end, transparency breeds trust in both leadership and fair pay.
4. Include non-financial performance measures in reward schemes
Increase accountability by including some non-financial performance measures in updated review schemes, including indicators of diversity, equality and employee wellbeing. Many organizations are arriving at the conclusion that individual pay for performance schemes is short term, resulting in increased interest in collective schemes where everyone shares in the success of the company.
5. Review benefits offerings beyond cash compensation
It’s important to recognize that traditional benefits programs underserve groups with different needs and circumstances, which is why reviewing benefits and wellbeing offerings in addition to cash compensation is vital, specifically benefits and offerings that became highly valued during the pandemic. Additionally, strive to evaluate the utilization of existing programs and revisit hierarchical benefit schemes for relevance. Some companies are deciding to flatten their reward structures, so allowances and benefits are either for all employees or none.
To some extent, this value-led approach to pay fairness and transparency is being aligned against the emerging focus on stakeholder capitalism and the re-definition of business purpose with a mission to serve not only shareholders but also customers, suppliers, workers and communities. We do, however, need to ensure this re-definition is not just performative, but authentic and transformative.
Now is our opportunity to limit escalating inequality and take personal responsibility for driving change. It’s uncomfortable to reflect that each of us in HR, Comp or as business leaders are culpable to some degree for unfair people and pay practices that exist today. We presided over the design of executive incentive schemes that have driven wage inequality as well as those zero-hour employment arrangements that have undermined fair treatment.
The transformational reforms necessary to achieve inclusiveness, equal economic opportunity and social justice typically take generations to morph. So, let’s embrace the lessons learned from the pandemic and apply them towards accelerating fair pay equity outcomes today.