The fight to eliminate the gender pay gap is in full swing, with the countries like Canada who passes the gender pay gap legislation and the issue of the gender pay gap will become a major topic of interest in the 2020. Despite efforts of activists, politicians, and even many companies, nearly half (48% percent) of U.S. workers still believe that men get paid more than women at their company. This staggering number proves that there is much more that the organizations can be doing to help close the pay gap and communicate with their employees about the pay Gap.
Although efforts from governments are not being overlooked, implementing regulation can take significant time, and meanwhile the size of the gender pay gap has become stagnant over the past decade. So what can companies do outside of compliance to help eliminate the gap? The answer that sticks out as both helpful and easily actionable is implementing compensation technology. Through AI-powered technology, companies can kickstart a movement to eliminate the gender pay gap through pay transparency, personalized total rewards, and the elimination of unconscious bias.
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Opening the Door to Pay Transparency
Knowing your coworkers’ salaries is no longer a taboo; in fact, more than four in 10 (45%) employees know how much their colleagues make. Conversely, most employees are still worried about bringing up the topic of compensation with their managers. Less than one in five (19%) employees say they are comfortable discussing salary or compensation with their managers or supervisors. Although discussions among colleagues is already providing a level of pay transparency for employees, the lack of involvement from companies means it’s much more likely for them to give incorrect assumptions or hearsay that lead to upheaval or frustration in the company when it comes to compensation.
Digital compensation technology can empower companies to create pay transparency that sets the stage for the employee conversations, rather than avoiding, them. Leveraging predictive analysis for corporation-wide reports, detailing cost-of-living and industry salary benchmarks can provide the employees with the information they need to understand the company’s compensation strategy and how it relates to company goals and outside economic factors. It also gives employees a better sense of what they should really be paid, creating trust between the employer and the employee.
Understanding and Eliminating Unconscious Bias
Nearly one third (31%) of workers do not believe employees at their company are fairly compensated regardless of age or race, and one third (34%) of workers believe their pay is determined by what their manager feels they deserve to make rather than based on their performance. This is discouraging to both worker productivity and loyalty—and therefore the company’s bottom line. When workers feel they are being treated unfairly, they are more likely to leave the company; hiring a replacement can cost businesses a third of the employee’s annual salary. This points to the necessity of fair and transparent compensation practices, and although it can be difficult to determine whether managers are really making a decision based on bias, technology can eliminate the potential for discrimination in total rewards. Advanced compensation analytics can provide HR and management with insight into how pay is distributed throughout the organization, as well as how it correlates to gender, race, and additional factors. Furthermore, this technology allows HR managers and leaders to uncover gaps by comparing internal pay data to industry benchmarks.
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Personalizing Compensation Plans
Today there is a wide variety of benefits companies offer to their employees, from unlimited vacation time to free lunches to subsidized fitness memberships, and diverse employees value some benefits more than others. For example, Gen Z workers value flexible hours or remote working options most, while Gen X values holiday or year-end bonuses. AI and predictive analysis can better arm businesses with information to align with specific employees’ personal needs. While employees who are new parents may value life insurance and flexible work policies, employees who are just starting their careers may feel that free meals or fitness stipends better aligns with their needs. AI-powered tech can also help identify flight-risk employees or those with lowered productivity and provide an incentive boost to match employees with benefits they perceive to have the highest value. This strategy pushes employees to be more engaged and helps HR managers understand where they need to step in with a human touch.
In this, particularly tight labor market, employees value transparency and fairness from their employer, and it can be a reason a candidate does or doesn’t take a job. To stay competitive, companies must consider implementing technology, such as advanced analytics on total rewards, to create an environment of fairness and equality that sets the stage to close the gender pay gap.