Perceptions of Pay Equity Differ Greatly Among Employers and Employees

UKG, a provider of HR, payroll, and workforce management technology services, recently sponsored a research report entitled “Making Pay Equity Work for All.” Harvard Business Review (HBR) Analytic Services completed the research that led to the report. Based on their research, HBR found that organizations are making progress in reaching pay equity between men, women, and underrepresented groups. Employees and employers have quite different insights about how their organizations reach that goal and who should be leading those efforts. 

HBR completed the research report in April and May 2022 by surveying 453 business executives with knowledge of their organization’s pay equity plans and efforts. They also randomly surveyed 3,005 full-time employees, excluding senior or executive-level employees. Most executives (74%) and employees (71%) agree that pay equity is important for their organizations. The priority of pay equity is the only issue on which employers and employees agree. 

Responsibility for Ensuring Pay Equity

According to the largest number (47%) of executives, the chief human resources officer (CHRO) should ensure pay equity. Still, only 6% of employees believe that the CHRO should be responsible for these initiatives. The largest number (37%) of employees believe that the organization’s chief operating officer (CEO) should head up pay equity initiatives, and 39% of executives agreed. About 30% of both groups opined that the senior executive team should have responsibility for ensuring pay equity. Overall, this research indicates that employees expect their organizations’ top leadership to take the lead in pay equity initiatives. 

Success of Pay Equity Initiatives 

Employers responded that most of their pay equity initiatives focus on the following groups:

  • Women (59%)
  • People of color (55%)
  • Ethnic minorities (45%)
  • Members of the LGBTQ community (33%)
  • People with disabilities (23%)

Opinion on whether pay equity initiatives have been successful varies widely according to the demographic of the respondent. For instance, 40% of white men believe that pay equity has been successful for all groups. Only 25% of women, 23% of Black women, 22% of Hispanic men, and 16% of Asian women have the same view. 

Employee identification of the factors that most contribute to pay disparities in the workplace differed by race. For example, for Black and African American employees, the most significant factor is discrimination in opportunities for advancement. For Asian, Asian-American, Hispanic, Latino, and White employees, the most significant factor is discrimination in salary-negotiating abilities. Still, a substantial number of all employees also pointed to discrimination in salaries or hourly rates as a significant factor in pay disparities. 

According to this research, businesses should benefit from conducting voluntary pay audits to identify pay disparities, especially if they operate in states with transparency laws that will require public disclosure of pay rates. These audits can help businesses root out suspect pay practices, remedy problems, and provide safe harbor protections under some state laws. Businesses that engage in pay audits must be prepared to act on the results of those pay audits. 

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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