There are significant gaps in perceptions around pay equity between senior leaders within organisations and their employee bases.
New research by XpertHR and Executive Networks has found that 75% of business leaders believe that their company prioritises pay equity, but less than half (47%) of their employees agree.
More than 1,000 HR leaders, business leaders, and employees across the US and UK were surveyed. Results indicated that half (45%) of employees felt that pay inequalities existed within their company.
However, there were varying levels of confidence in how effective their organisation was at achieving pay equity, with business leaders being the most confident (77%), followed by HR leaders (69%), while employees were the least confident (50%).
Similarly, the research found that seven out of 10 leaders (71%) thought that current pay transparency practices were effective, while only 39% of workers agreed.
Leadership confidence in these pay equity efforts was perhaps driven by an understanding of the ramifications of pay inequity to their organisations, the study authors stated. Nearly half (47%) of HR leaders noted that inaction led to reduced employee retention, while 44% of business leaders said it could lead to reduced productivity.
Conversely, if action was taken, businesses could reap the rewards. For HR leaders the biggest advantage was improving diversity, equity, and inclusion in their workforce (54%), while business leaders were focused on increasing employee productivity (47%).
The study also found that pay transparency initiatives were largely driven by employee expectations (52%), candidate expectations (41%), and the belief that pay transparency was the right thing to do (41%).
With businesses understanding not only the societal importance of having pay equity, but also the strategic business impact that pay equity brought, the study said, senior leaders were being brought in to drive change. Almost half of business leaders (45%) said that the CEO should be responsible for leading pay equity initiatives, while senior HR leaders were significantly more likely to say the head of HR should be responsible (25% versus other business leaders 14%).
Pay equity was moving up the corporate agenda, said Jeanne Meister, EVP, Executive Networks and report author. She added: “HR is beginning to understand it’s growing beyond a DEI matter and evolving into a core pillar of a businesses’ strategic ESG plans. For HR leaders, this should be a welcome development. There is now a clear business case to be made for pay equity to get board level input and investment required, but employees need to be brought along this journey too. Here HR can shine, bridging the gap between leaders and employees, to take the entire organisation to more transparent and equal pay.”
Zara Nanu, CEO of Gapsquare, part of XpertHR, said that the gap between what leaders saw and what employees viewed needed to be narrowed: “With employee performance, retention, and attraction impacted by pay equity, businesses are right to see this as a critical issue, and one that C-Suite leaders need to put onto their agenda.”
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Late last year a survey by analyst Gartner found that staff who considered their pay unjust had a 15% lower intent to stay with their current employer, and were 13% less engaged than those who think their pay is fair.
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