Pay equity—Old issues and new views

There is now widespread commitment to tackle pay equity issues, but are we getting anywhere? It seems we are, says John McGill, but the gaps clearly remain.*

While working for a multinational remuneration consultancy in London in the 1980s, I was introduced to the issues surrounding pay equity. The view of the senior consultants at the time was that they had tackled the basic issues of ensuring neutrality in reviewing roles specifically through changing the processes around which their job evaluation methodology (a key tool being used) worked. They had adapted how jobs were analysed by introducing good committee processes (in those days a large percentage of job evaluation work was conducted by committee) with clear rules around what information was presented, and how committees interacted when reviewing a role. There was a genuine belief that the introduction of rigorous processes in how jobs were assessed had largely solved the problem.

Looking at the use of the same processes today (particularly job evaluation, which continues to be seen as one of the most useful tools for the robust analysis of roles), we see that same continued emphasis on good process. When I was a member of the group that wrote the New Zealand Gender Neutral Job Evaluation Standard some years ago, we put similar emphasis on the “how” in analysing roles, and ensured our own methodologies met the standards set.

Apart from private sector providers, other systems of job evaluation have been introduced by various New Zealand governments. In the early 90s and mid 2000s, the government of the day developed tools and processes and introduced these into the market. Unfortunately in both instances the tools failed to gain any market traction.

The first, from the early 1990s, had weightings around the different factors in the system that could be changed at will and as a result failed to reflect organisation structures adequately enough to understand how roles were different.

The second system, called Equitable Job Evaluation, was introduced by the then Pay Equity Unit, but never advanced beyond a beta test version and never finished. It also never had any central database, link to remuneration data or central moderation (so if I evaluated a role in Dunedin and you did the same role in Nelson, there was no one to critique them to say if one assessment was better or worse than the other).

But of course job evaluation is just one of many tools that can be used to address pay inequities within organisations. There is also strong emphasis on the neutrality of the systems we use with respect to age, ethnicity and disability, to ensure the tool is as fair as possible and can cover all the areas where bias may creep into decision making.

The elimination of gender-based inequities in pay involve the use of a range of tools—it cannot be done with a single job analysis system no matter how robust it is.

Leviticus 27:1-4, males are worth 50 shekels of silver, females 30 shekels of silver

The problems of pay inequities start with the institutionalisation of the practices at every level. As many observers point out, even the Bible weighed in on the issue (see Leviticus 27:1-4, males are worth 50 shekels of silver, females 30 shekels of silver), and the comment and commentaries have certainly grown to almighty proportions since that point.

Many very comprehensive analyses have been conducted and laws enacted across the globe, with revisions made in subsequent years. Today, there is widespread commitment across virtually all professions, industry groups, political parties and levels of employees to tackle pay inequities. But are we getting anywhere? It seems we are, but the gaps clearly remain.

Our new government has made a very public commitment to introduce policies and practices to reduce any gender-based pay inequities in as short a time span as possible, particularly among those groups it can influence most directly such as the public sector.

Annual reports will likely contain statements and data detailing the gender neutrality of pay within every organisation.

Already we are seeing examinations of processes and policy guidelines from central government that likely will only increase over the next year. One of the more likely outcomes of this process will be in reporting standards or guidelines. Annual reports will likely contain statements and data detailing the gender neutrality of pay within every organisation. Some overseas countries, such as the United Kingdom and Australia, make this requirement for organisations over a certain size—we can expect to see the same locally.

A Very Thorough Report

Although occurring some years ago, the Massey University Pay and Employment Equity Review Report and Action Plan (March 2011) is easily one of the more thorough and exhaustive analyses conducted on this issue in New Zealand. The report teased out 10 key gender equity issues at the university including occupational segregation, the issue of part-time employees, bullying and harassment, academic promotion processes, and starting salaries.
It examined different academic and non-academic groups, covering all the surrounding issues as noted above in detail. Most interesting in the report was the teasing out of the complexity of the issues which came out most notably in comments reported on why many take on contracted part-time academic roles.

What comes through very clearly in this 100+ page report is the interaction of a range of issues, some easily understood and able to be addressed, others more complex relating to career choices and options within those choices.

When Is A Difference In Pay Significant?

UK’s Equal Employment Opportunities Commission noted a figure of five percent as the limit beyond which pay differences should be deemed relevant.

While we often talk about the pay gap in terms of overall differences—which figures of today suggest are in the 10 percent to 15 percent range—there is another number that is worth knowing about and understanding. The UK’s Equal Employment Opportunities Commission noted a figure of five percent as the limit beyond which pay differences should be deemed relevant. This figure relates to reviews where a full population of data is available rather than a sample.

The importance of this figure should not be underestimated as it says clearly that there is a point beyond which further analysis may not be valid. Representation differences are also important. If a difference of 20 percent or more in the gender mix of the group being examined is seen, this must be examined as a contributory issue to possible gender pay inequity.

Getting The Business Processes Right Is One Step, But There’s Another

Attitudes generating bias around workplace choices likely starts much earlier and getting to the under-12s may well be where the problem needs to be addressed.

Discussion around a recent MYOB report highlights where the problem can be most intractable. In a review of the technology sector, the report noted that only three percent of 15-year-old females are thinking about the technology sector as a career option. Although a highly paid sector, female representation is at 23 percent.

Attitudes generating bias around workplace choices likely starts much earlier and getting to the under-12s may well be where the problem needs to be addressed. The perpetuation of gender-based pay differences lies in understanding these problems and addressing them with the right role models and attitudes as well as the corporate systems already noted.

Certainly the surge in successful positive role models in sport, politics, entertainment, and science today more than ever encourages and supports a different mind-set around careers and career options.

Where to from here?

There are plenty of tools available to examine pay differences and many of these tools have been available for many years now. Pay equity audits are becoming relatively common today and many organisations have lost their fear in conducting them and are becoming more comfortable in reporting the results back to staff. The clean-up of the internal processes of analysing internal equity, reviewing performance management tools, changing attitudes and use of language, and so on have all made the process of examining the pay equity of any individual organisation an achievable goal.

The bigger picture issues of what choices families and women are making given societal changes such as increased state childcare, changed attitudes to primary caregiver status, and increased opportunity is likely to be where these issues will finally be resolved.

nobody ever kicked open their bosses door to show them a job ad proving they were overpaid

Challenges will remain of course. A major issues is the complexity in any pay equity analysis involving different occupational groups both within and external to organisations. The considered choice of appropriate comparator groups will perhaps be one of the most difficult issues to address, especially given a most basic human trait of gravitating towards a larger number in considering pay issues (nobody ever kicked open their bosses door to show them a job ad proving they were overpaid).

While the anomalies are undoubtedly out there, ensuring any analysis can be conducted in as objective and as fair a manner as possible will perhaps be our greatest challenge.


Article by John McGill, the chief executive officer of Strategic Pay

Employment Today cover - HR Solutions*This article first appeared in Employment Today, New Zealand’s leading publication on HR management and employment law.

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