Celebrating Equal Pay Day 2023, Pay Equity Has Now Become More Important than Level of Pay, Josh Bersin Company Research Finds

• New Research discovered that well-communicated Pay Equity is almost thirteen times as important for employee retention and engagement than "high levels of pay and benefits"
• Despite this correlation, pay equity is largely unsolved. While 71% of executives think pay equity is important, only 14% have allocated budget and staff to address the challenge
• Equal Pay Day—symbolizing how far into the year women must work to earn what men earned in the previous year—remains a call for action among business leaders

OAKLAND, Calif., March 14, 2023 /PRNewswire/ -- The Josh Bersin Company, the world's most trusted human capital advisory firm, today previews The Definitive Guide to Pay Equity: Increasing Productivity, Innovation, and Sustainability—a comprehensive report to help CHROs and the wider C-suite understand and address the issue of pay equity. The release of The Definitive Guide to Pay Equity comes at a time when pay equity has never mattered more, and coincides with today's Equal Pay Day.

A key finding from the report is that pay equity as a driver of good employee experience, innovation, and overall business performance is more than the aggregate level of pay. On a list of 84 employee experience strategies, ranked by their impact on outcomes, fair and equitable rewards were number 5, while above-average compensation and benefits ranked much lower, at number 75.

Despite a strong commitment among employers to address pay inequality, there is also a significant gap in execution. 71% of CHROs and the C-suite see pay equity as a critical component of their people and business strategies. However, just 14% of organizations dedicate sufficient budget to effectively tackle pay equity issues. 

The Josh Bersin Company's pay equity study examined 448 companies internationally. In addition to the top findings, the study uncovered other important insights, including:

• 95% of companies are failing to achieve the highest level of pay equity maturity. They either overlook the issue of pay equity until a legal, compliance, or reputational risk arises, or they engage in sporadic projects that address pay equity in a piecemeal fashion. This results in issues recurring repeatedly.
• Meanwhile, the 5% of companies that excel in pay equity are reaping significant benefits, including higher profitability, improved customer satisfaction, and success in attracting and retaining top talent.
• Fueling this challenge, only 21% of companies listen to employee feedback on pay equity and only 15% are willing to communicate the required to address the pay equity issue.
• New technologies to help spot pay inequities are still not well adopted. Only 14% of companies in our studies are actively using data and equity platforms to pinpoint problems.

The U.S. has been striving towards pay equity for over fifty years. In 1963, John F. Kennedy passed the first Equal Pay Act, banning overt policies and practices that paid women and men differently for equal work. Additional Federal legislation expanded the focus beyond gender to encompass race, national origin, and other protected classes, and all 50 states have passed or enhanced their own.

In recent years, massive lawsuits like Google's $118m settlement and ever-increasing legal pressures have brought the issue of pay equity to the forefront of CEO agendas.

Josh Bersin, global industry analyst and CEO of The Josh Bersin Company, said:

"While most companies know they must increase pay during times of inflation, they do not understand the problems they create when people feel the system is unfair. Most employees know that they are paid for performance, but when they perceive unfair practices (due to bias, racism, sexism, or simple politics) they lose confidence in the company and their sense of trust is damaged. The result is more politics, turnover, and low levels of engagement."

"The problem goes beyond bias, however. Companies have to discuss what "equity" really means, and what criteria will be used for bonuses, rewards, and raises. Our new Definitive Guide builds on the experiences of world-class companies and helps teach HR teams and CFOs how to address this issue."

Kathi Enderes, Senior Vice President, Research and global industry analyst at The Josh Bersin Company, said:

"Considering that pay equity has been on the agenda for around 50 years, it's shocking that as many as 95% of companies are not accomplishing the highest level of pay equity maturity. Half of the companies are only addressing pay equity to mitigate legal issues, while 37% view pay equity work as a sporadic process conducted once a year. Now, though, pay equity trailblazers like Patagonia, Microsoft, and Adidas are realizing that performance-related pay is not the ultimate goal. They understand that pay equity is not only about fair and equitable pay and bonuses but also a means of running a company equitably. Done right, every decision in the organization must be explored through an equity lens."

The Definitive Guide to Pay Equity is available exclusively to The Josh Bersin Company members and shares complimentary resources here. The company also offers a new certificate course on pay and rewards, The Changing Face of Rewards, available here.

About The Josh Bersin Company

The most trusted human capital advisors in the world. More than a million HR and business leaders rely on us to help them overcome their greatest people challenges.

Thanks to our understanding of workplace issues, informed by the largest, and most up-to-date data sets on workers and employees, we give leaders the confidence to make decisions in line with latest thinking and evidence about work and the workplace. We're great listeners, too. There's no one like us, who understands this area so comprehensively and without bias.

We help CHROs and CEOs be better at delivering their business goals. We do that by helping you to manage people better. We are enablers at our core. We provide strategic advice and counsel supported by in-depth research, thought leadership, and unrivalled professional development, community and networking opportunities.

We empower our clients to run their businesses better. And we empower the market by identifying results-driven practices that make work better for every person on the planet.

For more information, visit www.joshbersin.com or email [email protected].

SOURCE The Josh Bersin Company