Optimizing Talent Through Equal Pay
Highlights from SHRM Linkage’s inaugural Evolve to Solve webinar
In 2024, women earned just 83 cents for every dollar earned by men — an improvement from previous years, but also evidence that the gender pay gap remains. At the same time, many businesses struggle with succession planning and leadership development because they aren’t making the most of the talent available to them. Addressing pay disparities is no longer just about fairness; it’s about business performance.
Pay disparities remain a significant barrier to career advancement. For women to matriculate through the workforce and advance in their careers the same way men do, they need to be paid fairly. Organizations must optimize the talent they already have by upskilling and advancing employees to stay competitive.
In the first installment of Evolve to Solve, SHRM’s new webinar series, Tamla Oates-Forney, CEO of SHRM Linkage, sat down with Maria Colacurcio, CEO of pay transparency software pioneer Syndio, to discuss how businesses can solve ongoing pay inequities — and broader workforce challenges — through pay transparency.
Making the Business Case for Equal Pay
As more organizations embrace pay transparency, it’s transforming the job market. “Pay is synonymous to one’s value. When people feel they aren’t paid appropriately for a job, it impacts their ability to be recruited and retained by companies, and to perform their best work,” Colacurcio said.
Clearer compensation practices have become essential for attracting and retaining top talent — and allowing companies to remain competitive.
A decade ago, companies never intended this data to see the light of day. Today, they must connect pay philosophy to decisions being made. Frontline managers need to be able to explain why employees are paid what they’re paid.
Disclosing gender gaps is critical to assess and reduce waste. This includes identifying gender pay gaps and optimizing workforce skills to improve business outcomes.
“Pay equity doesn’t mean paying everyone more,” Colacurcio explained. “There’s a lot of areas in your company where you’re probably overpaying. Whether it’s for skills, whether it’s tenure that’s not paying out in terms of performance ... if that’s not something that drives the results you want to see at your company."
“A couple of estimates found that companies lose up to 10% of their compensation budget due to this misalignment,” she added. “There’s a bunch of areas, particularly in the way the market is moving, where you’re probably overpaying at the starting pay point for things that don’t matter as much anymore to your company.”
Bridging the Gap Between Policy, Pay Decisions
Pay disparities often stem from a disconnect between company policies, organizational values, and the pay decisions made every day.
As a leader in global pay transparency solutions, Syndio helps companies analyze pay equity, streamline compliance reporting, and make smarter, data-driven compensation decisions at scale. The goal is to bridge the gap between what companies say they value and how they actually distribute pay through hiring, promotions, and transfers.
Two key questions for businesses are: What employee contributions matter most to the organization, and how are those contributions reflected in pay decisions?
Ensuring alignment requires data-driven decision-making, which starts with structured access to data. This enables employers to make fair, unbiased pay decisions based on the value of the job, rather than personal factors.
To address these challenges, Syndio recommends a four-step process:
- Run a pay equity analysis. Identify and analyze pay gaps. Determine whether they exceed U.S. state pay transparency laws or EU Pay Transparency Directive requirements. Determine if trends in compensation decision-making reflect what the company truly values, and if adjustments are needed.
- Determine how to prevent gaps from returning and avoid new gaps. Ensure all pay decisions align with company policies by eliminating inconsistencies, such as basing salaries on negotiations or location rather than performance. Implement structured, data-driven compensation practices to maintain fairness and reinforce stated company values.
- Compile reports. Generate clear reports to track pay equity progress, ensure regulatory compliance, and highlight the impact of compensation policies. Regular reporting builds trust by demonstrating a commitment to fair and transparent pay practices.
- Run communication exercises. Equip frontline managers with the knowledge and tools to clearly explain pay structures and policies, as well as how compensation aligns with company values. Effective communication fosters transparency, employee trust, and confidence in pay fairness.
Evaluating Total Direct Compensation
Colacurcio emphasized that compensation goes beyond base pay — it also includes bonuses, incentives, and benefits that shape an employee’s total direct compensation. Pay disparities often emerge outside of base pay, making it essential for companies to evaluate all aspects of compensation.
Syndio identified seven key areas for companies to evaluate to ensure fair and competitive compensation:
- Base pay
- Bonus
- Equity
- Health
- Wealth (e.g., 401(k))
- Time off
- Vacation
However, it’s crucial to approach fairness holistically — and beyond mere dollar amounts. For example, employers sometimes offer access to benefits such as time off for certain groups, including employees with caregiving responsibilities. Take the time to evaluate how these policies compare to competitors, and ensure they align with your company’s core values.
‘Equal Work for Work for Comparable Value’
At Syndio, the goal is to protect everyone from unlawful discrimination. Its solutions do not favor or disfavor any one particular group.
Syndio’s customer data analysis shows that 85% of pay comparisons show no significant gender-based differences. But in the remaining 15%, the results are surprising: 4 out of 5 times, women are disfavored, and 1 in 5 times, men are disfavored. This data highlights how unlawful bias can impact anyone and why it’s so important to do analyses for a data-driven view of where you have disparities due to characteristics such as gender or race.
The old approach was based on equal pay for equal work. The new approach is based on the principle of “equal work for work for comparable value,” Colacurcio said.
Leaders should ask what type of work the organization values most. “Do we, as an organization or a corporate culture, value work because of who’s doing it?” she asked. This requires looking at pay across functions. “For example, if you have a director of IT, is that role actually providing the same amount of value to the company as a director of HR?” she asked. If so, Colacurcio recommends companies take a step back and look at the gender differentials between who’s filling the IT roles and who’s filling the HR roles.
Leveraging Data for Pay Decisions
Businesses can leverage data, AI, and machine learning for more informed and predictive decision-making. By doing so, they can identify any exceptions made by decision-makers, and whether these disparities are due to external market conditions, outdated policies, or bias.
For example, if Java development is no longer as scarce a skill, natural language processing is no longer as necessary in this world of large language models. Think about dynamic pay policies that are being constantly informed by the market, as well as pay decisions being made at your company every day.
Additionally, ensure you aren’t discriminating or making decisions based on bias. Make sure you aren’t paying for things that don’t matter, or impact pay based on gender, race, location, etc. You don’t want to hire based on race or gender, but “you also don’t want to pay someone less because of those things,” Colacurcio noted. “You also don’t want to overlook somebody for a promotion that has all the right skills and abilities because of those things.”
Optimizing pay data can help companies stay competitive, retain people, and optimize talent, Colacurcio said: “Organizations that can leverage data to come up with that balance — where they really are, in a real-time way, monitoring and molding policies through to pay decision — those are the ones that are going to stay competitive.”
Learn more about how SHRM Linkage empowers talent optimization.
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