Dive Brief:
- With pressure to reach gender pay equity and indeed pay for performance (a mantra that has had much lip service but little success since it hit the HR suite), more employers are rethinking their compensation strategies, according to the Wall Street Journal.
- The classic salary model of decision-making based on an annual budget delivered by the finance department, among other things, is starting to fall short for HR leaders tasked with creating a workable compensation plan, according to the Journal.
- Kerry Chou, a compensation expert at WorldatWork, a nonprofit HR association focused on pay and benefits, told the Journal that for employers looking to adjust, the first step is to create a compensation philosophy that helps employees “understand what the company’s mindset is and what’s valued there."
Dive Insight:
The Journal cites Google Inc.’s about-to-retire HR executive, Laszlo Bock, who laid out some idea on how employers can create pay policies that can cut the gender pay gap, putting the onus on HR to make the change. EEOC pressures are also building, especially as states like Massachusetts, California and others continue to make gender pay inequity essentially against the law.
The article outlines the common way employers typically reach pay decisions, which greatly depend on salary benchmarking data across industries with job titles, duties etc. It also offers some alternatives to for today's fast-changing workplace, including algorithmic, data-based solutions.
For HR leaders, this is among the most serious change management issues today. Between new state laws, EEOC pressure, the federal government's new overtime rule and trends such as salary transparency bearing down, moving to a new compensation philosophy to truly reflect each employee's worth is a tough challenge.
