Large payouts cause more than just financial stress

What is most astonishing about the equal pay settlement in North Cumbria is not the amount of compensation involved (£100m), but the impact this will have on staff morale.

As a result of this deal, the staff will be split into haves and have-nots, with the haves potentially flaunting their new-found wealth and the have-nots left stressed and seething – with HR being left to pick up the pieces.

The common-sense view says this could easily have been avoided by awarding men and women equal pay in the first place. Yet there is a reluctance among the HR community to take the initiative on equal pay audits.

The HR Prospects survey from our sister publication IRS Employment Review says that a quarter of organisations have no intention of conducting an equal pay audit, and a further 25% plan to ‘keep this informal’. One focus group participant said he was shying away from an audit for fear of the “can of worms” it might open up.

Fear of the consequences may put people off, but best practice suggests it’s a good idea to go ahead and open the can anyway. Yes, there may be some short-term pain, but what about the long-term gain?

Being open and transparent about pay structures not only helps avoid public pay disputes, but benefits the individuals in your company and the organisation as a whole. A public sector participant in the survey said the audit process gave “a good story to tell” – a story which could ultimately have a positive impact on recruitment and retention and help create a competitive employer brand.

The alternative, as the NHS trust in North Cumbria found to its cost, could be disastrous, particularly for private-sector firms that don’t have government funds to bail them out.

By Karen Dempsey, editor

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