Why Pay Equity is Fun Business

Jan 24, 2019

I had FUN this week talking about pay equity and compensation. I did. More importantly, so did the attendees of a workshop I was invited to speak at. Seriously. If you’re cringing right now, I get it. PAY EQUITY is one of these values that we all likely agree with, but scraping away the compensation structure in many of our companies is hard, dang, work.

I took the temperature of this group. They represented mostly small to mid-sized companies, and when I asked for a raising of hands as to how they felt their compensation structure in their companies was in terms of equity laws.

I have to admit I got very few high-in-the-sky hands waving me down to show me how compliant they are. That’s okay, because first step, they were there to learn more.

The main point of the training was to help employers understand that because 2018 was an insignificant legislative year, Pay Equity is getting a lot of attention so we better move, yes move on it, like now!


While there’s a little truth to that, Pay Equity is finally coming to the forefront, and stems from many broken glass ceilings by males, and catching up of more minorities and females in the workplace. EVERYONE gets a seat at the table now, no matter what company and what position. Make it make sense when it comes to pay, no matter who fills the position.

Inequality also stems from some pretty amazing companies that have grown very, very quickly and like many of you reading this, initially hired a lot of best friends, family, neighbors and a few super eager go-getters and paid them whatever felt right at the time. Then, holy s#!t, we have all kinds of salaries and bonuses and benefits, all scattered around. New people are joining the team and wearing different hats, and owners are realizing we can’t pay like that anymore. Time to bring it in people!

Word for the moment when it comes to Pay Equity–INTENTION, and another word, COMPENSATION STORY (fine, that’s two words). Let me brake this down in a few easy steps, then after you’re totally confused, call HR Annie and my team can help you sort this out. (shameless plug) Seriously, it’s not rocket science, but it is important to know what you’re doing.

I “heart” companies like Payscale.com that have spent years pulling in data and putting together beautiful summaries and white pages and trainings and webinars and good, solid, market wage data. (No, I don’t have any special arrangements with them, I just like them). If you have the budget, and if you have a lot of positions, have never done a compensation study, or you are growing and adding a lot of positions to your company, they are worth the investment. If not, hire a “consulting firm” such as the one I own (hint), or you can even DYI it by using some pretty reliable online tools. However you do it, make sure you are intentional about finding out the following:

  1. What are the current wages for each position in your industry and your market(s).
  2. What other kinds of compensation are typical for your industry and your market(s)–bonus, profit-sharing, equity.
  3. What kinds of benefits would employees expect
  4. What other amazing offerings can you provide? Paid Time Off, Perks, Discounts, Swag, EAP, Teledoc, etc…you have them people, get creative! This equates to moola!

Once you find out the relative data, you build out your Levels. To do this you need to establish some Internal Equitable Factors—what the heck?!

Yes…you need to establish different characteristics that apply to all jobs, and give them numerical factors. For example, Experience Needed, Hazards, Customer Service, Travel, Decision Making, etc…depending on how high a level is needed to be successful in that position, a number will equate. Don’t worry about titles as you go through this process…this is about job characteristics.

Build out the levels in your company, and then build out the ranges. To begin, start with what you are currently paying internally. Different people are probably making a little different pay depending on certain variables. That’s okay, but in the end, it has to make sense. Then, use the data you researched and create your mid-point of pay…a lot of people use the 50% percentile of the market, but if you want to be ultra competitive or need to find specific talent, consider bumping up the mid-point to a higher wage level.

There’s a lot of information that goes into developing the ranges, but something to consider is how long do employees typically stay in these positions at these levels? Seasonal, short term, or quickly advancing levels might have a narrower range, whereas middle management or those that stay longer will have a wider range.

A lot of people ask what to do about the outliers? Those that are being underpaid and those that are being overpaid? This is a case by case scenario, but in short, there are several ways to manage this–anything from making a lump sum wage distribution to get wages up, to freezing top salaries to halt the inequity. The main consideration is that when it’s all said and done…sleep on it. All night. Sleep on it and when you wake up, ask yourself if it feels right. If there are positions that just don’t make sense, there are solutions.

Back to why this was fun…

So many companies have never put a lot of thought or INTENTION behind the way people are getting paid. I’ve seen people shy away from sharing pay information during the hiring process (and by the way…no more asking what someone is making!!). I’ve seen people avoid conversations with employees about raises. I’ve seen people trying to navigate a hidden world where people don’t discuss wages (which is also a big no, no now). Why do they do this? Because they don’t have good answers or methodology…or CONFIDENCE in what and why they are paying what they are paying.

By doing a compensation analysis, you get to tell your employees and prospective employees their whole story–and how it equals money.

From wage, which is only one aspect, to benefits and perks, paid time off and other compensable things. This is what they want to know. So, now as you can imagine, when an employee says they want a raise, you can tell them exactly yes, or no and WHY, with confidence and assurance.

By the way…by having a compensation structure, you can also create labor budgets, forecasting and developmental predictions, and you will know how much that is going to cost you, plus, you will be in compliance with the law, and that feels good too.

For more information visit us at hrannieconsulting.com. Hire us to Speak, Train, Workshop or Webinar. Bring us in to develop your compensation structure.

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