How companies can close the pay equity gap in nine simple steps - Macleans.ca

How companies can close the pay equity gap in nine simple steps

With new legislation coming, employers need to crunch the numbers—and then deal with any problems. Practical advice for making a change.

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An awkward question for employers: Does your company pay men more than women? You may want to say “no,” but statistics suggest the answer is probably “yes.” And with the Canadian government rolling out “equal pay for equal work” legislation in April, the time for blind eyes and dragging your feet is done. But besides writing a pile of ladies-only bonus cheques, how can employers actually close the gap and work towards sustainable change? Here are nine ways to start.

Dare to crunch your numbers

Understand that it’s very possible to have a wage gap problem and not even know it. “I’m sure many employers will say, ‘Oh no, there’s no issue here’,” says Jason Beeho, Toronto employment lawyer. But the truth is you don’t know until you’ve really looked. “It takes a big picture analysis to identify these disparities, and employers need to start by taking stock and structure of their overall organization,” he says. Smart bosses will identify problems before someone makes a public claim of discrimination.

Bring in an expert from outside

Tackling this sort of wage analysis isn’t job for a single person in your finance department. “You need a compensation review from a specialized professional in the field,” advises Janet Salopek, HR consultant at Salopek & Associates. An objective, outsourced report is worth the investment for countless reasons—including the simple message it sends. “It validates the issue, it shows you take this seriously, and if you were ever to be legally challenged, it would work very well in your favour,” says Salopek.

Make it official policy

If your business is really committed to equal pay, it should be built into your company’s foundations, says Salopek. “Look at your official policies and procedures on compensation. Do they even reflect equal pay for equal work? Do they clearly represent the values of your organization?” If not, it’s time for a re-write.

Embrace the tier system

Even if two employees started on the same day—with the exact same schooling and experience—their negotiation strategies could lead to a too-large salary discrepancy. Employers can dramatically reduce both overpaying and undercutting their employees by embracing a clear tier system that organizes candidates into groups by experience. “Specific rungs in the compensation hierarchy can be applied neutrally and across the board to help eliminate discrimination,” says Beeho.

More: Nearly three-quarters of Canadians want pay transparency

Skip the lax interview process

Once you’ve created tiers, would-be hires should also be considered according to those rungs, says Greg Leskew, head consultant at DDI. Having defined job profiles with appropriate salaries can then replace “gut feelings” and “culture fit” (both are just bias in disguise). “Less structure and an over-reliance on hiring manager’s instincts opens the door to unbalanced hiring decisions and wage gaps.”

Get your leaders on board

Results from the compensation report, plus any policy changes that result, shouldn’t be subtle. “Sweeping this under the rug is the worst thing you can do,” warns Salopek. “You need to get out in front of it and be transparent.” This means honestly educating managers, who will no doubt be fielding questions and concerns from everyone else. Leaders can bring this good news: the new federal legislation says employers can’t cut the pay of better compensated employees to bring themselves into compliance with new laws.

Shut down the haters

With change so near, a warning: “Any effort to achieve equality will see some people push back and say it’s unfair,” says Sarah Kaplan, Director of the Institute for Gender and the Economy at U of T’s Rotman School. But men crying reverse-discrimination can be easily squashed when bigger men set a good example. “Senior leadership at the top needs to set the tone and explain it was actually unfair before. Then everyone should get on board because it’s the right thing to do—and it’s illegal not to.”

Reward potential, not performance

Handing out praise and prizes to those already leading the race mostly reaffirms the status quo. A better plan, says Leskew, is to reward not on performance but on potential. “Objective assessments can spot individuals and label them ‘high potential’ to receive plum assignments and more visibility within the organization—both factors that affect salary levels,” says Leskew. A recent DDI study found eliminating performance ratings was tied to more women in leadership roles because it levels the playing field and allows talented people to blossom.

Once you’re done, do it again

For nervous bosses fretting their bottom line, here’s a very comforting stat: “The bulk of companies, if they do it right, can fix their wage gap by spending less than 1% of their payroll,” says Liz Wright, HR and compensation consultant at Gallagher McDowall Associates. But it’s not a one-time fix, and a year’s worth of hiring, bonuses and promotions can skew your numbers in the wrong direction. “It’s so important for companies to manage this issue on a continual basis,” says Wright. “If you want to be proactive, you need to make a promise and a commitment and keep it.”