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Pay Transparency On Its Way?

If you've got 100 or more employees, you have to disclose pay disparities by sex, race and ethnicity. Well, that was the ruling by the Equal Employment Opportunity Commission (EEOC) in 2016, but it was frozen without good reason by the Trump administration. They've been sued, though, and if reinstated, the deadline to report is just over 2 months away.

What could pay disparity reporting mean for the United States? We can look to other countries which have done exactly that for some clues. Britain and Denmark are among several countries to enforce similar rules and research is showing that it works. Mandatory transparency generates better data at the national level and the industry-level which can help organizations understand where they stand. More importantly, it moves organizations to shrink the gap in multiple ways - not only do the raw numbers in compensation change, but decisions all along the employee lifecycle have shifted in response to this reporting.

Everyone stands to gain from pay parity, so employers need not be fearful of this rule; increased diversity in leadership (while not a measure of pay parity directly, representation parity is related to pay parity) results in huge returns, like 35% percent higher returns than industry medians. If I were on a corporate board, I would start questioning whether a company that wasn't implementing a clear strategy toward equity was meeting the obligation to pursue good returns for shareholders.

Resistance is futile - and foolish. Organizations should prepare to report and also prepare to enjoy the benefits of moving toward pay parity.

Do you have personal experience moving your organization toward pay parity? I'd love to hear about it in the comments or at abcontractor@WorkplaceEquityPartners.com.

©2018 by Workplace Equity Partners