Pay transparency is a hot topic in HR circles these days, with state and local governments pushing—or requiring—organizations to be open about their pay practices when posting jobs and to report on their pay practices regularly. What's more, many organizations are adopting such policies voluntarily.
This can be a huge burden for HR teams, especially in very large organizations. But technology can help.
It's important to gather input from key stakeholders and carefully evaluate the many potential vendor partners in the market.
While pay equity has become crucial to compliance in recent years, that's not—or shouldn't be—the only driver of organizational efforts, said Suzanne Harris, vice president of HR at NexusTek, a managed IT services provider in Greenwood Village, Colo., with approximately 300 employees. "It's just the right thing to do," Harris said. Pay equity and transparency, she said, simply makes sense—first from a recruiting standpoint, and then from an employee relations standpoint.
Big Benefits from Pay Equity Technology
"If you can put the pay ranges out there, that saves our recruiters and candidates a lot of time," Harris said. Everyone knows up front if the salary will meet their needs.
Technology can also be used to ensure that pay rates and ranges are equitable, both internally and externally. In working with NexusTek's vendor, Harris said, initially "we really needed to get a hold of some good benchmarking data to work with that would cover a wide variety of roles in our [geographical area]." They've been able to do that, she said, through their vendor's salary benchmarking tool and their own talent market insights. That ability, she said, was especially helpful for NexusTek, as the company has gone through some acquisitions, resulting in pay for similar roles being varied.
From an employee relations standpoint, continually monitoring pay data ensures equity, said Erin Toliver, vice president of global compensation and payroll with Lumen Technologies, a telecommunications company in Monroe, La. Lumen spent several years transitioning its pay equity work from internal analysis to an external vendor. It's currently in the early phases of implementation with the vendor.
"Technology provides us the opportunity to have a real-time pulse on the status of pay equity within our organization," Toliver said. "Rather than taking a once-a-year, moment-in-time snapshot, we will be able to review our pay equity statistics more frequently, allowing for proactive decision-making rather than reactive mitigation."
Technology also speeds and expedites what was formerly a very time-consuming and manual process. Importantly, though, it's not just about the numbers—it's about the insights those numbers can provide.
What Pay Equity Technology Should Do
Janine Nieuwoudt is country head, U.K., and head of global HR and operations at HireRoad, an HR technology company based in Arlington, Va. "HR technology should provide quick and easy access to information, not data," Nieuwoudt said. "Meaningful business learnings, and therefore good business decisions, are made on the back of more than just simple data. A good system should have the ability to go further than that, and should ideally be able to tie into other systems within the company."
In addition, Nieuwoudt said, technology should be able to integrate data across systems. "The power of data is far superior when it is able to tap into a number of business areas rather than a myopic view on one area alone," she said. "For example, an analytics solution that can mine data in my HR system and collate that against data from our finance system will produce significantly more useful information and trend analysis than an analytics solution that looks at HR alone."
Nieuwoudt said she doesn't mean to suggest that HR analytics on its own isn't extremely valuable. But she stressed: "The value add comes from having a solution that can utilize various sources of data to ensure full transparency. A solution that can't tell you the whole truth is less valuable to HR and to the business than one that can—even if that truth is hard to swallow."
Correlating data from multiple sources, such as HR, finance and productivity, means that elements such as pay equity will be fully exposed and transparent from any departmental view, Nieuwoudt said.
Choosing a Vendor
With so many technology options to choose from, making the best decision for your organization can be hard.
"When selecting a pay equity tool, we considered many options, including homegrown analytics, external legal reviews as well as external vendors," Toliver said. Lumen's final decision, she said, was based on the vendor's robust platform and knowledge in the pay equity space. "Not only can they provide extensive tools for evaluating pay and opportunity gaps, but they have an expert team to help advise on changing global legislation, best practice and mitigation strategies."
When considering vendors, HireRoad's Nieuwoudt said, it's important to have a good understanding of the problem the platform needs to solve—or "what enhancement of HR and business knowledge you're looking for when it comes to analytics."
Toliver said Lumen pulled in resources from various groups in the organization to help with the decision-making process, including legal, broader HR inputs and business leaders. This, she said, can "help inform the vision for pay equity within your organization."
It's not just about legal compliance, Toliver stressed. It's also about culture and the employee experience. "Pay equity is not a total rewards responsibility but the responsibility of every employee and manager in the company," she said. "The more you can weave that mindset into your strategy and philosophy, the more it will drive accountability across the entire organization toward ensuring pay and opportunity equality."
In choosing a reputable vendor, Nieuwoudt advised not to overlook smaller tech companies. "Technology is changing rapidly, and there are some great products that do a lot more than might first meet the eye—often at a far more competitive price," she said. "Smaller vendors are also often far more attentive because they can often focus on individual customers with a more hands-on approach than larger entities with a much bigger customer base. When it comes to HR technology, bigger is not always better."
In addition, user experience will be a key consideration, Toliver said. "Selecting a vendor with a platform that is easy to navigate, secure and flexible to your business needs is critical."
Lin Grensing-Pophal is a freelance writer in Chippewa Falls, Wis.