Equality in compensation and benefits.

A final important element in the development and retention of talent is offering fair and equal compensation to all your employees.

In many industries worldwide, not all employees get equal compensation. If you want to work on DEI, it’s essential to implement an inclusive and consistently applied compensation & benefits policy. There are different pay or wage gaps, such as the gender pay gap, the racial pay gap, the motherhood pay gap, etc. Data from the OECD show that the gender wage gap, for example, is a global issue.

If your company is serious about DEI, it must address potential wage gaps or inequalities. You will need executive buy-in and commitment to implement and adhere to equal compensation decisions.

Action 1: Evaluate your current compensation & benefits policies.

You might think your compensation & benefits strategy is fair and transparent but is that the case? Committing to equal pay is of the utmost importance to keep all your talent, especially those from underrepresented groups. It’s therefore essential to evaluate the status of your comp & benefits strategy. That might lead to discovering issues you were unaware of or uncomfortable conclusions. First, it’s necessary to assess and map your current strategies thoroughly. Then, consider taking the steps below:

Regularly audit your pay systems and continue making the necessary adjustments.

Action 2: Check your performance appraisal and career development process.

Inequalities in wages are often related to disparities in career advancements. It’s, therefore, necessary to also check your performance appraisal system to ensure all your employees receive the same career opportunities.

One of the reasons companies might have a high overall gender pay gap is because of the underrepresentation of women in leadership positions. It’s then essential to check your career development process and tackle performance appraisals.

For more tips on organizing bias-free performance reviews and improving your career development process, click here.

Action 3: Structure reward systems and make them transparent.

You can undertake several activities to have a more structured and transparent compensation & benefits policy. Consider your organization’s size, strategy, and culture when implementing some of the actions below. In addition, make sure that any approach you design complies with your country’s legal obligations and framework.

  • Benchmark wages.

A first step to ensure you have a fair compensation system can be to benchmark your wages with your competitors in the same region, industry, labor market, etc. It allows you to check if you are not underpaying your employees compared to competitors. Benchmarking can also be essential when setting pay or wage grades and the following pay ranges (as described below). Benchmarking can also warrant more transparency in your wages, especially when negotiating with new job candidates. You can buy salary surveys to benchmark your company’s wages.

  • Create a salary structure by using job evaluation.

If you are not doing so already, consider using job evaluation methods to create a wage or salary structure.

Job evaluation means systematically comparing the jobs in your organization to each other to determine the relative worth of each job. Several systems evaluate jobs, such as job classification, banding, the point method, the Korn Ferry Hay Group Guide Chart-Profile Meth, etc. Whichever approach you use, the main idea is to determine the relative worth of each job so that you can attach pay or wage grades to groups of jobs.

A pay grade comprises a group of jobs with approximately the same difficulty, responsibility, etc. Pay grades are then further divided into pay ranges. A pay range shows the steps or levels within each pay grade. For example, a step can be based on the number of years’ experience, necessary degree, skills, etc. You can find more detailed information on job evaluation here. You can go through this process or use a consultancy agency to guide you through the job evaluation process.

Try to avoid using “long” pay grades. There are so many steps in the pay grade that the difference between the minimum and the maximum can be huge. Large pay grades offer more flexibility to your system but can also cause inequalities that can demotivate employees.

Lastly, when you have a salary structure, stick to it. Avoid exceptions and use the one system for all jobs and all employees.

  • Increase transparency of your pay system.

Transparency about your compensation & benefits strategy is paramount. If you have a salary structure, communicate this to all your employees. Everyone in your organization should know where to find information on this structure and how they can advance in their pay grade.

Consider mentioning salaries in your job ad or be transparent about this early in the recruitment and selection. That way, you increase the trust of job candidates and reduce salary gaps. It can also lead to a more positive candidate experience or journey. Applicants won’t face the unpleasant surprise of a lower-than-expected job offer at the end of their application process. That often leads to competent job candidates declining offers.

  • Try to avoid salary negotiations.

Most inequalities in compensation are either caused by inconsistencies in the use of salary structures or by allowing individual job candidates to negotiate their compensation package fully. If this is possible, avoid salary negotiations and stick to your salary structure and predetermined benefits package. Instead of negotiating for every role, present a persuasive offer based on the salary structure. In the proposal, you can explain the philosophy and process behind your salary structure and precisely what the offer entails (each part of the compensation). Applicants aren’t just looking for cold hard cash anymore, so it can be good to include future opportunities and gains that might come with the role in the offer.

If you can’t avoid negotiations, consider these two actions:

Some exciting sources to help you:

  • Three steps smaller organizations (fewer than 50 employees) can take are described here.
  • Lever’s description of fair compensation, you can download their DEI guide for free here.
  • Checking for risky practices when setting a pay strategy.

Action 4: Introduce inclusive benefits.

Next to creating a fair, equal, and transparent compensation policy, it can be good to focus on offering rewards and benefits that are inclusive or that can contribute to building an inclusive culture. Two key things to consider when implementing inclusive benefits:

This article explains how to build inclusive benefits packages.

Below you can find some examples to inspire you. Here you can find a more detailed explanation of those benefits.

Other inclusive benefits might include:

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