Often triggered by new legislation and motivated by an intensified social debate about fair and non-discriminatory compensation, more and more companies have begun to put their compensation reality to the test in recent years. In many cases, they have been supported by the hkp/// group, providing guidance on the path to a successful fair pay certification – starting with the initial analysis, by identifying where action is needed leading to the development of a process to ensure fair pay. Jennifer S. Schulz, Senior Director and compensation expert at hkp// group with extensive experience in fair pay analysis, describes five key success factors.
1) Be clear – concrete goals to focus
Why just determine the status quo? The willingness to invest time and effort increases among all project participants if the goal is formulated clearly: We want fair pay – period! By when and how this goal can be achieved is determined on the basis of the subsequent analysis.
2) Be prepared – no analysis without data
If you have a well maintained data base right at the beginning of a fair pay project, the analysis will be easier. Gender, compensation data, job classification and master data such as age and length of service can have an impact on compensation levels and are usually available. However data on work experience, the date of the last promotion or on the individual performance are often difficult to compile with reasonable effort. The more explanatory factors are included in the analysis, the higher the explanatory value typically turns out to be – or to put it another way: The pay gap, which cannot be explained and is therefore potentially due to discrimination, becomes smaller.
3) Be aware – which factors are fair?
But be careful: are the selected influencing factors really all reasonable? Age is often used as a proxy for work experience due to lack of available data. And more work experience often means more salary because the work is generally done more effectively.
But is it really fair if a person doing the same job for 20 years earns more than a person doing the same job for only three years just because of their age? It depends on the conscious decision of each company what they want to base their compensation on, in other words: What is it they actually want to pay for? For performance, is often the answer. But including this factor is also a double-edged sword. Can a company ensure that the performance evaluation process leads to a non-discriminatory assessment?
It is clear that if the explanatory factors are not non-discriminatory, the resulting pay gap will be biased and therefore not be meaningful.
4) Be open to change – really want to change something
A fair pay analysis provides valuable information on where to look more closely to achieve pay equity. Those who do not intend to do this or are not prepared to do so can dispense with the analysis. After all, it is not primarily a matter of closing compensation gaps selectively through compensation payments. If you are serious about sustainable change, you will develop measures to implement fair processes.
5) Be transparent – communication as the key to success
Results and measures should be communicated, especially if the pay gap is still large. Being transparent as a company, showing the will to change and setting clear goals creates sympathy and support – among employees, applicants and investors. Fairness can only be achieved if everyone in the company pulls together!
Conclusion: Non-discriminatory compensation is a journey
These five success factors for successful fair pay analysis show: gender equality is not achieved with a snap of the fingers. The struggle for fair pay is more of a journey. And for this particular journey, the German saying “Der Weg ist das Ziel” (EN: what matters is the journey, not just the destination) applies in a very special way. That's because every step leads to knowledge gains, and even the beginning of the journey will be recognized if you follow the success factors described here. We wish you a successful journey and are at your disposal if you are looking for a travel companion to support you.