3 in 4 Organizations Regularly Audit for Pay Equity

March 12 is Equal Pay Day, marking how far into the new year women must work to earn what men earned in the previous year. Pay inequity continues to plague U.S. workplaces, but new research by SHRM indicates that HR professionals are committed to paying employees more fairly.

Seventy-five percent of organizations say they regularly audit for pay equity, according to the survey of 777 HR professionals. The characteristics most commonly assessed in pay equity audits include gender (80 percent), race or ethnicity (68 percent), and age (62 percent).

“Pay equity is one component of IE&D [inclusion, equity and diversity],” said Annemarie Schaefer, vice president of research at SHRM. “SHRM research has shown that fair and equitable pay practices can lead to improved employee satisfaction and engagement, which results in lower turnover, which leads to benefits to an organization’s bottom line.”

Many HR professionals and senior leaders undergo pay equity training. However, people managers— “vital advocates” for fair pay for their employees, SHRM researchers noted—are less likely to participate in such training.

“Relying on HR teams and senior leaders to be solely responsible for pay equity isn’t practical,” Schaefer said. “Hiring managers, given their role in the hiring process and their ongoing responsibilities to the productivity and engagement of their teams, should be trained on these pay equity topics.”

Additional Research on Pay Inequity in the US

The SHRM survey also found that 74 percent of HR professionals agree that women face discrimination in the labor market. Despite this realization, a 2023 report by Pew Research Center showed that the gender pay gap has seen virtually no improvement in the past two decades.

Female workers on average make 83 cents on the dollar compared to men, according to the new 2024 Gender Pay Gap Report by Payscale. However, the pay gap actually widens as women climb the corporate ladder:

• Female managers and supervisors earn 83 cents on the dollar.
• Female directors make 82 cents.
• Female executives make 72 cents.

Multiple studies show that wage transparency can play a significant role in helping close the pay gap over time. In many instances, listing pay ranges on job postings leads to more applications and a greater quality of applicants.

A separate SHRM survey revealed that 42 percent of HR professionals said their organization operates in a location that requires pay ranges to be included in job postings. When not required by law, more than two-thirds of those surveyed (67 percent) said their organization voluntarily lists starting pay in their job openings sometimes, often or always.

Pay transparency helps to unveil disparities, instill accountability and empower employees to champion fair compensation practices, according to Shana Feggins, an IE&D expert based in New York City.

“Through transparency and accountability,” she explained, “employers foster a culture of equality and advance their journey toward a more inclusive and equitable workplace for all to thrive.”

How AI Can Help Reduce Pay Inequity

Feggins said that HR can revolutionize efforts to improve workplace pay equity by harnessing artificial intelligence. By leveraging AI-driven analytics, she explained, HR can identify and address hidden biases, ensure objective compensation decisions, and promote fairness and transparency.

“Through the strategic implementation of AI technologies, HR can pave the way for a more equitable future where every employee is valued and compensated fairly for their contributions,” she said.

Workplace experts previously told SHRM Online that AI could help develop compensation metrics that reward employee efforts. It can also assess labor market data to provide localized and up-to-the-minute competitive pay rates.

A 2022 study published in the journal Applied Artificial Intelligence concluded that machine learning tools can mitigate bias because such tools are based on objective data. The result is a methodology that can reduce the gender pay gap while preserving internal equity and offering a more acceptable salary to individual employees.

Feggins added that investing in strategies and tools to close the gender pay gap, such as AI and automation tools, can “underscore their commitment to inclusion and belonging.”