Making Pay Equity Work for All

New Harvard Business Review Analytic Services study sponsored by UKG examines existing inequities, organizations’ priorities and why the time for change is now

A new study on pay equity in America sponsored by UKG and conducted by Harvard Business Review Analytic Services, reveals organizations are making progress when it comes to prioritizing equal pay among men, women, and underrepresented groups in the workplace. However, employers and employees have vastly different perceptions on how that is being achieved, and significant, systemic barriers remain when it comes to implementing long-lasting change.

“What this data tells us is that pay inequity isn’t just limited to one specific attribute. It’s the intersectionality of all these things — race, gender, gender identity, sexual orientation, and more — that contributes to the persistence of unequal pay for equal work performed”

The study, “Making Pay Equity Work for All,” compares responses from 453 company executives and 3,005 employees of all levels and examines strategies that separate pay equity leaders from others; the impact intersectionality has on the perception of pay equity progress; and how leadership, pay transparency, clear communication channels, and innovative technology tools can help organizations achieve lasting pay equity. This study is a cornerstone of the UKG Close the Gap Initiative, creating awareness and action regarding pay equity — one of the most enduring and unjust realities in the workplace.

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“Equitable pay is a basic human right. It is fundamental to an individual’s sense of worth as well as their ability to care for themselves and others,” said Brian K. Reaves, chief belonging, diversity, and equity officer at UKG. “We are all born with equitable talent, but society has shown we lack equitable opportunity. For far too long, the pay scales have been tipped in favor of white men. This study shows now, more than ever, that organizations must recognize the importance of prioritizing equal pay in the workplace, disparities persist, and employers’ actions are not always enough or aligned with employees’ expectations.”

Employer, Employee Perceptions Differ Greatly When It Comes to Pay Equity

The report reveals 74% of executives consider pay equity a moderate or high strategic priority, and 71% of employees agree the issue is an important priority for their organizations. However, the similarities end there. Fewer than half of employees (41%) believe their employers have successfully achieved pay equity, and 26% say their organizations have been completely unsuccessful in ensuring equal pay for equal work. Furthermore, the survey shows 49% of companies do not have a well-established pay equity plan in place, and nearly a quarter (24%) of employees are not aware whether such plans exist within their organizations.

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Lack of Transparency Fuels Culture of Silence

One of the reasons for the divergence of opinion is a lack of transparency. Forty-six percent of organizations admit they are not transparent in the area of pay equity, and 34% of employees say that silence is a major obstacle to implementing equal pay. With no insight into how their compensation compares with that of their colleagues, nearly a third (32%) of employees say they are unwilling to speak up or negotiate. Even worse, Black as well as Hispanic and Latinx employees (40% versus 28%) are twice as likely as white workers to remain silent, followed by 34% of Asian or Asian-American employees, impeding pay equity progress.

Top Contributors to Pay Disparities

Race plays a significant role in what employees view as disparities in pay equity. More than a third (35%) of Black employees attribute discrimination in opportunities for advancement as a major factor, followed by 26% of Asian Americans, and 20% of Hispanic and Latinx employees. Similarly, 32% of Black and 25% of Asian, Hispanic, and Latinx employees cite discrimination in salaries or hourly rates. And 32% of Asians, 31% of Hispanic and Latinx, and 27% of Black employees cite differences in salary negotiating abilities, compared with 25% of white workers.

Unequal Distribution of Pay Equity Efforts

Race isn’t the only factor when it comes to unequal distribution of pay equity efforts. Employers say the majority of their efforts are directed at women (59%), followed by people of color (55%), ethnic minorities (45%), members of the LGBTQ+ community (33%), and those with disabilities (23%). And when it comes to how effectively organizations have succeeded in establishing pay equity for all employee groups, 40% of white men believe their employers have accomplished this, compared with just 25% of women, 23% of Black women, 22% of Hispanic or Latinx men, and 16% of Asian women.

“What this data tells us is that pay inequity isn’t just limited to one specific attribute. It’s the intersectionality of all these things — race, gender, gender identity, sexual orientation, and more — that contributes to the persistence of unequal pay for equal work performed,” said Reaves. “Organizations and their leaders must commit to doing the hard work — putting in the time, effort, and resources to uncover where those biases exist, whether intentional or not — and take steps to correct the problem and do right by their people.”

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