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Pay Equity: Where to Start, Where to Go, and How to Get There

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Did you know that pay inequity is still a big problem in Canada’s private sector? University-educated women earn 27 percent less than their male counterparts. University-educated visible minority workers make 20 percent less than non-visible minority workers. The gap is even larger for aboriginal workers. University-educated aboriginal workers are paid 44 percent less than non-aboriginal workers.

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Discrimination is one of the causes of these differences in earnings. While you’d never discriminate against your employees on purpose, unconscious biases can lead to differences in pay.

So, how can you fix this problem? Small and medium-sized businesses should use cloud-based HR technology to help achieve pay equity in their workplaces. Here’s how to work towards pay equity at your business.

Involve Your Employees

Before you get started, let your employees know you’re going to take steps to ensure pay equity in the workplace. This transparency is valuable to employees. By involving your employees in your plans, you can build trust. 

Some of your employees may worry they’ll receive a pay cut due to your investigation. Reassure them that no one will be getting a reduction in pay, even if they’re getting paid more than coworkers in similar jobs. In Ontario, reducing compensation to achieve pay equality is against the law. To fix pay inequity issues, employers need to raise compensation for underpaid employees.

Perform a Job Analysis

To identify wage gaps in your company, you need to analyze employees’ jobs first. This is done by grouping your company’s positions into job classes. Job classes are groups of jobs that have similar features. Jobs that have similar duties, qualifications, recruiting procedures, and pay scales should be in the same class.

You can use your human resource information system (HRIS) to gather the data you need. With your HRIS, you can see the business framework and job classifications for every position. You can also view the total compensation for each position. Once you’ve sorted every position into a class, you can move on to the next step.

Identify Wage Gaps

Once you’ve sorted jobs into classes, you can start looking for wage gaps. Employees performing jobs of equal value should be getting equal compensation. Remember, compensation includes everything you’re paying employees, not just their salaries. Look at other types of compensation too, like health benefits, paid time off, and bonuses.

During this analysis, you may discover that some employees are receiving less compensation than others in similar roles. Your HRIS can give you management insights to help you determine if there’s a good reason for this gap. For example, it makes sense for mediocre performers to receive less compensation than high performers. Seniority may also be a factor to consider.

Implement Pay Equity

During your investigation, you may find wage gaps that you can’t explain. For example, you may have two high-performing employees in similar jobs, but one is receiving more compensation than the other. These gaps need to be fixed.

To fix your pay inequity problem, increase the salary or other compensation for your underpaid employees. Ensure they’re receiving the same compensation as their coworkers. This could include increasing salaries or benefits for some employees.

Continue Monitoring Pay Equity

Once you’re satisfied that your employees are being paid fairly, your work isn’t done. It’s easy for pay inequity to sneak back into your company. For example, if your company goes through organizational change, pay gaps could re-emerge. Or, if you make changes to your benefits plan, some employees could receive more benefits than others.

You need to be vigilant to ensure your employees are continuing to be compensated fairly. With your HRIS, you can easily gather the data you need to monitor pay equity.


Margaret Reid

Margaret Reid

As the senior vice-president of Apri Insurance Services Inc., Margaret is a benefits consultant and manager of technical support. She has almost 40 years of experience in employee benefits as well as processing health and dental claims, benefits administration, and client service and groups sales. Margaret worked at Crown Life, a major insurance carrier, for 20 years, then worked at CG&B as the manager of their group department. She moved to B.Comm Financial Insurance Solutions in 2007, which merged with several other benefit consulting companies in 2011 to create Apri Insurance Services Inc. Margaret has unintentionally followed in her father’s footsteps. He was a group sales rep with Crown Life when she was a child and helped her get her first job in group insurance, which led to her current career path.