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What Is the Difference between Pay Equity & Pay Transparency (and How Does It Affect My Staff)?

Jun 12, 2018 9:00:00 AM / John Griffin / Core HR / 0 Comments

What_Is_the_Difference_between_Pay_Equity_&_Pay_TransparencyOne topic under intense discussion in many business and HR circles right now is pay equity. While Canada has had equal pay laws on the books since the 1980s, Statistics Canada’s continued reporting on pay and wage gaps makes it clear these laws may not be enough.

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As a result, there’s been a renewed push for pay equity. One measure being implemented is “pay transparency.” Ontario, for example, introduced pay transparency measures in 2018.

This has left some questioning the difference between pay equity and pay transparency. Both are intended to reduce the pay gap, but they are very different things, and they have different effects on your staff.


What Is Pay Equity?

The idea behind pay equity is quite simple at first glance. It means “equal pay for equal work.” If you have two managers with the same level of responsibility, performing at the same level and who have been with your business for the same length of time, they should be paid exactly the same amounts. The same is true when you hire two new staff members with similar experience.

This is the theory, at least, and pay equity laws are designed to enforce this. Many businesses, however, appear not to be following the rules, and discrepancies between pay levels often reflect some form of bias. This isn’t always consciously practiced. For example, a hiring manager may reason a male candidate has better skills and training than a female candidate, even though the two candidates are actually equally matched.

Another example is raises. A male sales representative is perceived to have performed better than a female sales representative, and so he earns a higher raise. The data reveals the two sales representatives performed equally well. Later, the male representative is promoted, while the female representative isn’t considered.

Pay equity is important for your staff because it means everyone is valued on the same scale.


Bias Persists

The problem with equal pay measures is that bias persists. While hiring managers and HR managers may not reason a woman doesn’t deserve the same raise as a man, their biases may cause them to view the two employees quite differently. They thus assess performance differently, and their pay and promotion decisions become biased. The same is true in the case of non-white employees. They’re often viewed as less capable and skilled than their white counterparts, even when this is patently untrue.


The Need for Pay Transparency

Bias is difficult to eliminate, and it’s proven particularly difficult to remove in the payscale. Part of the problem is that companies often encourage a culture of privacy and silence around issues of pay.

This allows bias to slip through unseen. One employee may not be aware her male counterparts are being paid more than she is, even if they were hired on later or have less experience.

Pay transparency is supposed to fix this issue by requiring companies to report salary information openly. Making this information available to employees allows them to identify discrepancies and then to challenge those differences.

Pay transparency alone won’t fix the wage gap, nor can it enforce true pay equity. What it can do, however, is make your employees more informed and aware of how the payscale functions within the company. It gives them the tools they need to push back against perceived bias that may be operating in the company unseen.

You’ll need to take steps to prepare your business for pay transparency. One good way is to ensure you’re practising pay equity to begin with. Take a moment and critically consider if bias could be influencing some of your payscale decisions. If so, it may be time to re-evaluate policies. Pay equity creates a better, more supportive culture within the workplace, and so you should strive for it.


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Topics: Core HR

John Griffin

Written by John Griffin

John Griffin is Executive Vice President, Operations. With 16 years of experience, John has worked exclusively as a group benefits professional for his entire career, where he has had the good fortune to have worked with some of the best brands in the business as they entered new markets for the first time. He is obsessed with the client experience for both plan sponsors and plan members, which translates into tireless advocacy for bringing innovation into the insurance marketplace. John Griffin holds a BA from the University of Toronto and earned an MBA from Warwick Business School in England. John has written and published three books and spends most of his leisure time hunting down the best food in every city he visits.

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