Getting pay equity right requires much more than just crunching the numbers.

Let's partner to create a comprehensive approach to pay equity that delivers lasting results for your people and business.

Why Act Now

First and foremost, it's the right thing to do. Eliminating pay inequities based on gender, race, ethnicity, and other protected statuses is quickly becoming a major topic of conversation across the industry. Even more, based on new regulations across the globe, we are finding that many of our clients need insight into their pay equity risk and what they can do to respond quickly. We are seeing a number of significant forces brewing in the market for talent that make addressing pay inequities a true competitive imperative today, including:

  • Attracting Diverse Talent — We all know that the competition for talent is as fierce as ever. One solution to the challenge is throwing more money at the same talent, but that only goes so far. The long-term solution is attracting new, more diverse talent. Firms that develop a reputation for delivering pay in a fair and transparent manner will become destinations of choice.
  • Pay Transparency — With each passing day, the pay transparency movement grows stronger; your people have access to unprecedented insight into their market value. Companies that acknowledge this shift and respond with well-design compensation systems that support all employees equally will quickly develop a reputation for fairness and transparency.
  • Legislative Action —  From California to Massachusetts to New York to the United Kingdom, a number of new laws are affecting the HR and compensation community. Navigating these rules requires a consistent global approach grounded in a strong culture of fairness backed by deep local expertise and strong compensation systems.

Our Approach & Process

Our approach is grounded in this basic understanding: measuring pay gaps and delivering pay in an equitable fashion are two fundamentally different things. It's one thing to look for differences in pay between groups of people, it's quite another to understand, mitigate, and fix the policies and biases that create those differences in the first place. Our process challenges clients to go beyond simple pay assessments to find and fix root causes. That's the only way to drive systemic and sustainable change.

  • Partner — Projects of this nature need partners, including business leaders, HR leaders, and inside and outside counsel. Our role is to bring these constituents together and guide them through a rigorous data-driven process aligned with your short- and long-term business goals.
  • Discover — We'll review your existing pay policies and practices to understand your overall approach to pay and the types of behaviors and outcomes you actually intend to reward.  During this phase, we look at a host of employee demographic data like job, job group, job title, tenure, and location as welll as a number of talent indicators including promotions and employee movement. Our experts are avaliable to help review job architecture structure to ensure your firm is looking at an apples to apples comparison for employees.
  • Analyze — With your support, we'll transfer, clean, and analyze your HR data to conduct a multiple regression analysis of all relevant pay drivers. Only by controlling for appropriate business-related pay drivers can we fully assess the true drivers of unintended pay differentials between demographic groups.
  • Interpret — We'll assess your overall risk profile and identify the specific policies, practices, and behaviors that drive risk in your organization. Next, we'll drill down on specific individuals who receive less pay than they should relative to other similarly valuable employees and begin discussing potential remediation strategies.
  • Change — Our team represents a comprehensive set of perspectives rooted in an understanding of workforce analytics, the law, compensation strategies and your industry. With this background, and often in tandem with legal counsel, we can do much more than just detect problems—we can develop plans to adjust compensation for individuals, redesign pay structures, and realign performance management processes, including implicit bias training.

Build Your Response Plan

Following most regression analyses, we find areas where immediate change is required. Sometimes change is needed at the individual level, policy level, or both. And in every case, remedies must be executed and communicated with caution. Every response plan we build for clients includes guidance in the following key areas:

  • Individual Actions — Whether change is needed for one or two people, or an entire class of people within a function, we’ll help you design individual plans to adjust pay for everyone who has unexplained pay gaps. Importantly, we’ll help you assess the best ways to deliver adjustments, including salary and bonus increases and special equity awards.
  • Policy Actions — Just fixing symptoms does not eliminate root causes. Sometimes companies simply need better documentation and guidelines around pay decisions, but often we find that policies around leaves of absence, starting pay, and performance ratings are most responsible for lasting pay gaps. We’ll give you straightforward advice on where and how to fix these policies.
  • Communication — While some organizations have famously gone public with their efforts on pay equity, we typically recommend taking a very careful approach to communication aligned with your culture and brand. While doing nothing is the worst option, doing too much publicity can be harmful. Most often, clients simply fold adjustments into upcoming merit increase cycles.

Create Lasting Change

In cases where pay inequities are driven by large systemic issues—previously unknown biases, poor linkages between pay and performance, weak job and salary structures or poor recruiting practices—we’ll help you craft a strategy for long-term change. Some of our most common follow-on work streams include:

  • Starting Pay Calculators — Most clients do not maintain good data on starting pay for their employees. However, in one case, we found that starting pay levels explained half of a client’s gender pay gap. Given the outsized role historical pay can play, we often give clients tools to suggest starting salaries based on external benchmarks based on our comprehensive McLagan compensation survey data and internal pay equity.
  • New Job Structures — Weak job and salary grade structures are often key factors that drive pay gaps by gender and ethnicity. Specifically, structures with narrow pay bands and too many grades / jobs often attract scrutiny from lawyers and governmental agencies. mclagan has helped hundreds of technology and life sciences companies build, rationalize, document, and justify job and salary structures to both improve compliance and increase pay fairness.
  • Data-Driven Change — We never lead with a solution in mind. We’ll go where the data takes us. Past projects have uncovered supervisory biases, inconsistent leave of absence practices, and even overly-aggressive diversity and inclusion programs as root causes for real or apparent pay gaps. We’ll leave no stone unturned to look for potential risks and solutions.

Meet Our Pay Equity Leaders

 

Shelley Eisenhandler
Partner, McLagan

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Liz Snyder
Associate Partner, Ward Group

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Rajiv Ramanathan
Associate Partner, People Analytics at Aon

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Ready to Learn More?

Contact our team today to develop a highly-tailored approach to measuring and addressing pay equity issues at your firm.