Companies should not wait for dire circumstances, such as an employees resignation or worse case scenario a pay inequity lawsuit, in order to manage employee compensation policies.
The development of a pay equity/compensation policy within an organisation is the first step toward addressing the gap around pay.
These five tips should help you manage any salary inequities within your teams:
1. Determine your organisational compensation philosophy
Define and establish how your organisation will structure pay and what your focus is regarding pay, is it internal, external or performance based etc...After you develop your philosophy you can move on to creating your compensation policy.
2. Conduct market research
Subscribe to and participate in reputable salary or industry surveys to obtain data. Know where your organisation's compensation sits relative to the market where you compete for your talent. This may include factors like your industry, geography or size of organisation, to name a few.
3. Select the types of compensation
Beyond base salary, what other forms of compensation does your company offer, when and why? These can include bonuses, such as individual commission and incentives, team incentives, company-wide incentives, benefits, fringe benefits, and others. Review each type and determine if one or a combination of these options work for your organisation and who in the organisation will be eligible for each type of compensation.
4. Review your process
Think about the process you'll use for balancing internal pay equity against market or internal competitiveness. This will include some research about using a straight market-pricing philosophy versus a job evaluation tool to put similar jobs within pay grades. There are advantages and disadvantages to each approach.
5. Create and distribute the pay equity policy
Develop communication information that shares your organisations pay policy. Ensure all managers, employees and potential employees are informed of this policy. Many employers are hesitant to adopt a formal policy for fear they may cause unrest. Not dealing with issues of inequity puts both the organisation and individual at risk.
Final thought
In order for organisations to promote equal opportunities in employment you need to be committed to the fundamental principle and procedures to determine the pay and conditions of employment of all employees do not discriminate and are free from bias. In order to achieve equitable pay, organisations should operate a pay system that is transparent and based on objective criteria.
Simon Boulton is Director of accounting and finance recruitment practice Aequalis Consulting. He has more than 12 years of finance recruitment experience in London and Sydney, where he has launched multiple divisions for international companies. At Aequalis Consulting, he provides tailored strategies for companies in various industries to attract and retain the most talented professionals in the market. Visit www.aequalisconsulting.com.au.
