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Lessons in Pay Equity

In March, members of the United States women’s national soccer team (USWNT)—the reigning World Cup Champions—filed a complaint with the Equal Employment Opportunity Commission (EEOC), alleging wage discrimination by the U. S. Soccer Federation when their pay is compared to the men’s team. As this gender pay equity fight plays out in the public eye, here are three lessons that employers should take to heart.

Pay your top performers fairly

When you tell your top performers that they don’t deserve to be paid fairly and should just be grateful to have a job, you can expect that they won’t be your top performers for much longer. They’ll either leave as soon as they can to go work where they’re valued or their motivation to continue performing at a high level will dwindle, neither of which are good outcomes for you. Remember, the point of pay-for-performance is to incentivize and then reward employees whose stellar work drives your business forward. If you’re not paying the people who deliver high-caliber results at least as well as those who don’t, why not? Ideally you should rectify the situation with adjustments to bring your top performers’ pay to the right level as soon as possible. If budget limitations have you shying away from this course of action, remember that you don’t have to do adjustments all at once; a multi-year plan is better than no plan at all, especially when you consider employee turnover costs (along with the hit you’ll experience from losing your best employees).

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Try not to get defensive or hide your head in the sand

When you uncover (or are confronted with) a pay disparity in your organization that may not be justified, your response should not be to deny that it’s a problem or ignore it and try to keep the status quo for as long as you can. Instead, you should take immediate action: dig deeper to see why the disparity exists. If you confirm there’s a problem, then fix it. If the disparity involves someone in a protected class, fix it immediately. Concerned about the dollars involved? Believe me, it could be much more expensive if an employee brings legal action and you’re found to be in violation. If you find that the pay disparity is actually appropriate based on differences in employee performance, experience, education or skills, be forthright about that fact too—and then take the opportunity to communicate with employees about the concrete things they can do to earn more.

Get it right, then keep it up

When word gets out about real or perceived unfair pay practices at your company, get ready for a slew of unintended consequences. The inevitable employee reviews on Glassdoor will batter your organization’s reputation and employment brand, thus affecting your ability to recruit new talent and retain your current employees. The risk of a drop in employee engagement is very real, which can lead to lower productivity and a blow to your bottom line. So what should you do after having addressed any pay disparities? Make sure you have a compensation plan in place, conduct regular audits of your pay practices, and consider being more transparent with your employees about compensation and all the work you’re doing to ensure you’re paying fairly.

Interested in more resources on fair pay? Check out PayScale’s searchable Modern Compensation Hub.

Kari Van Hoof
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