Audits will highlight problems with pay before they escalate

Equal pay audits and questionnaires fly in the face of modern performance
management, but they are a vital process in tackling discrimination in the
workplace

HR managers are facing a dilemma, and as a career HR manager myself, it is one
I can entirely identify with.

In recent years, we’ve all had to get to grips with the commercial reality
that effective competition in an increasingly global market requires, finding
ways to get more out of people for the same money, or the same out of fewer
people.

We have become leaner and flatter, we have created more flexible jobs and we
have encouraged staff to adopt a less fixed and more project-based approach to
their work.

As a result, the emphasis of pay policy has shifted from jobs to people. I
have spent a considerable number of hours advising employers on how to develop
and reward employees for their individual contribution more than for their job
size. Performance management and a focus on how as well as what people deliver,
have thus become the drivers for the way organisations want to pay their staff.

Now we are being told we must audit our pay practices to identify and
address any pay gaps between the genders against like job sizes (and, ideally,
between ethnic groups and the able-bodied and those registered disabled as
well). But what does this mean for the stretched HR manager trying to allocate
scarce resources that are supposed to be supporting the business objectives?

Its intention is noble; there is still an 18 per cent gender pay gap, and
fairness for the employee has to be an essential tenet of HR. But surely such
auditing, with its apparent focus on the job rather than the person, threatens
to turn any business-related strategy on its head.

It is up to the HR profession to provide some clarity. Firstly, the need to
audit pay is about understanding and justifying why you pay people differently,
and ensuring you have the evidence to do so.

Secondly, your audit must not focus on pay practice alone, but also on the
rigour of the HR processes that underpins that practice. While careful data
collection and analysis through computer software will identify the gaps, it
will not give you the reasons behind them.

Thirdly, the need to audit pay for equality is not about having to pay people
the same as soon as the gap is identified – there can be a commercial
perspective to developing an action plan and agreeing the timescale in which to
close the unjustifiable pay gaps between the genders.

Finally, this ‘voluntary requirement’ to audit pay practice does not have to
mean a return to those narrow pay grades that ensured everyone with the same
job size earned a salary within the same tight range.

Of course there may be pitfalls and HR managers may need help, particularly
with equal pay questionnaires being introduced this month. Consigning them to
the office shredder risks ‘adverse inference’ at employment tribunal. Equally,
employers have a duty of confidentiality to staff and obligations under the
Data Protection Act. So although we can refuse to answer the questions, we must
also explicitly say why we are refusing. Instead, every reasonable step should
be taken to provide the data requested, even if it has to be anonymised.

The headline-grabbing pay gap between the genders is a summary fact about
the difference between men’s pay and women’s pay. It does not begin to identify
the extent to which women are or are not earning the same as men for work of
similar value. Nor does it explain why men and women may be earning different
rewards for broadly similar responsibilities.

Wouldn’t you like to know that you have a problem before it actually becomes
one?

By Jane Phillipson, Associate Director, Hay Group

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