New Regulations Will Force Companies To Address Pay Equity | Kathi Enderes

Workforce Trends

This article summarizes regulatory updates that have implications for how organizations approach various aspects of pay equity. While you can read the details of these regulations (e.g., the European Parliament approved a groundbreaking law, the Pay Transparency Directive, Australia made broad changes to the Fair Work Act, etc.) in the article, one point made is how the Directive requires employers to regularly report the pay gap (including disclosing to employees), and if the gap exceeds 5%, it needs to be addressed with actionable steps. The new directive will require companies to disclose many things – salary ranges, career progression criteria, and pay gaps. This pushes decisions upstream: what are our salary ranges, job families, job levels, career progression criteria, skill requirements, and overall pay philosophies? How do we handle pay for performance? Do we need location-based salary ranges? How do we handle scarce or hard to find skills? How do we structure our jobs? What skills are truly important for us? It is mentioned how some companies, such as Microsoft, Accenture, and Unilever, are being proactive by publicly sharing their pay equity progress in their DEI report. Schneider Electric also includes pay equity as a critical component of its management development program, and companies like Heineken, SAP, Nestle, and Unilever make pay equity a part of its People Sustainability agenda. Other ideas are discussed. As a bonus, I am resharing this recently published 36-page report by ADP Research Institute that looks at factors influencing how workers feel about pay equity.