Brought to you by Welch Consulting:
A lot of high expense lawsuits have been hitting the courts in the last few years over perceived pay gaps. There’s a history of companies compensating employees differently over protected statuses like age, color, national origin, religion, race, and gender. Although most companies have improved, lawsuits like these persist, and it’s in a company’s best interest to make sure they’re not perpetuating the age-old problem.
Running an audit can help a company know if they’re facing this problem, while also giving them the chance to improve and grow. A workforce with equal footing and pay is more likely to have harder working employees who will stick with the company.
Here’s how most companies audit compensation and steps to take after the audit.
Collect The Data
Data collection is one is the hardest of the steps if a company doesn’t already have a system in place. When it comes to sorting data, you can either outsource to firms that handle this work or use your current human resources department to work through current data.
The most vital factors to be considered are age, experience, gender, and race. If you have to ask an employee for more information in order to collect this data, then you need to be clear on its purpose. Let them know you’re working to make sure the company pays all employees fairly, and most employees will be agreeable.
Don’t guess on things like religion or work history. Make sure you have the correct information that you’ll need.
Group Data Based on Skill and Experience, and Analyze Data
Next, it’s best to go over the data you’ve retrieved and see what it’s telling you. It may be hard to parse since you’ll be comparing employees’ experiences against protected identities, but take the time your employees deserve. With a little patience, you may be surprised at what you’ll find. Some companies find an inverse of what would be lawsuit-worthy, including Google, which found in March 2019 that it was paying women higher than men for the same job.
If you’re not sure what classes are protected, or how much of a correction you’ll need to make, outsourcing economic consulting can ensure professionals go over the information for you. Instead of having to make guesses, it’ll allow you to step back and ensure that your data is accurate and your decisions are sound.
After you’ve gone over everything and looked over the information in great detail, you may need to take steps to make positive changes at your company. If there are discrepancies, correct them by paying the underpaid employees more. It might hurt to lose that profit, but employees are the lifeblood of a company, and by paying them well, they’ll be more loyal to your company.
Moving forward, use what you’ve learned from these studies to improve your company. Pay new employees based on the current employees’ wages, and when it’s time for raises, make sure you look over all of the data and make every decision with care.
By taking care of your employees, you take care of your business and avoid some hefty lawsuits along the way.
