Companies are often faced with budget concerns when determining solutions that can either be done in-house or outsourced to a third party. Pay equity solutions are no different.
While businesses want to make the best decisions for their employees and company needs, budget constraints are always present. And, there are other considerations, such as efficiency and liability, when assessing whether or not to involve a third party.
Every company is different and will have its own unique approach to pay equity solutions. While some businesses find the do-it-yourself approach acceptable, others want outside help, especially with the expectation for companies to be transparent about their diversity, equity, and inclusion (DEI) goals growing. Some will want a mix of the two. This is why I asked a group of business experts in diversity and inclusion, human resources, and legal strategy to discuss how organizations should decide on which route is best and to provide examples of what can be done in-house vs. what items an outside expert should handle. Additionally, I was curious as to the role of software when it comes to pay equity solutions and the possible benefits it can provide.
The benefits of “do it for me” solutions
For the most part, experts agree that outside guidance is worth the money especially since most companies have no experience in the area of pay equity solutions and audits. Outside experts in the field have more applicable knowledge and can gather pay equity data more efficiently. Bank of Canada Board Member, Loyal VC advisor, Debora Bielecki said, “leveraging external support would be most helpful when wanting to assess like positions in other industries to do some benchmark exercises.”
Understanding pay equity laws, and your organization’s compliance obligations with them, are essential before making any decision. If you decide to go the external route, you want a third party who understands all aspects of pay equity.
It is not only the experts’ knowledge in the field that is beneficial, but having professional outside assistance is also important to curb unwanted bias. For example, “confirmation bias” is the practice of interpreting evidence as confirmation of one’s own conclusions, thereby obscuring the full picture. Confirmation bias can impact statistical results if there are not the right checks in place. In addition, your employees can continue doing their jobs while others analyze pay equity at your company. Julie Thomas, Diversity Specialist believes experts are needed to guide the process. She said, “In my experience having external consultancy on what you need to capture, review and analyze is critical.”
The role of software
Software is key in extracting and compiling data for auditing and analyzing. Specifically, Ellen Raim, Vice President of People and Culture at Invoca said, “the first use of software is to allow you to extract and amalgamate the data by categories (date, length of service, gender, age, race/national origin, location, role, etc.) Looking at the data in all these ‘cuts’ helps you have a true understanding of the nature of the pay spread.” Obviously, software is great for data analysis, but it’s still up to the person doing the investigation to understand the data and how it should be interpreted.
Another very important thing to keep in mind is legality and policy. As Debora Bielecki points out, “Data at the employee level may be ok to share in some countries but other countries like those in Europe have work councils that don’t allow for anyone but the employee’s direct manager to know this data, leveraging software for such an exercise could be legally impossible.” Make sure those with access to employee data have the legal right to do so.
Brian Chossek, CEO at Impact 7 Generations, adds to that by saying, “both privilege (access to data and information) and mitigation of discovery (ensuring only the right data can be accessed in the right way) should be done in consultation with the digital security organization, and within the frameworks and policies they’ve developed in conjunction with legal.”
And so, organizations looking to achieve pay equity, diversity, and inclusion in their workforce should research pay equity solution options and recognize the importance of outsourcing a third party. To learn more about achieving pay equity, and deploying a highly effective pay equity solution, download our white paper; Designing a Successful Pay Equity Policy for Your Organization.
Conducting a pay equity audit is a key component to ensuring equitable compensation within your organization. Just as important as the analysis is how you communicate findings and progress with various stakeholders. Download The Pay Equity Communications Planner to learn best practices for discussing compensation, both internally and externally.