Building a More Equitable Pay Program. Shannon Drohman & Erin Wolford Compensation Connections LLC September 2018

Transcription

1 Building a More Equitable Pay Program Shannon Drohman & Erin Wolford September 2018

2 Shannon Drohman, MS, SPHR, SHRM-SCP, CCP 20+ years in HR and Compensation Shannon has developed compensation strategies and designed comprehensive total reward programs as an internal partner and external consultant. She serves a variety of clients, including non-profit organizations. Shannon is the immediate past president of LWHRA. She taught the Compensation course for the UW HR Certificate Program.

3 Erin Wolford, SPHR, SHRM-SCP 10+ years in HR and Compensation Erin has experience in all elements of human resources with a multitude of small to medium size companies in varying industries, including government, non-profit, for-profit, and start-up environments. Erin received her Bachelor of Arts degree in Comparative Ethnic Studies from Washington State University, where she double majored in Women s Studies and double minored in Psychology and Sociology.

4 What do you think about when you hear the phrase Pay Equity?

5 What s the issue?

6 What s the issue? The State of the Gender Pay Gap 2018, PayScale

7 What s the issue? Industry Uncontrolled Gender Pay Gap Controlled Gender Pay Gap Healthcare $0.812 $0.989 Manufacturing $0.830 $0.972 Nonprofits $0.853 $0.981 Transportation & Warehousing $0.837 $0.960 The State of the Gender Pay Gap 2018, PayScale

8 What s the issue? Pew Research Center, 2015

9 What s the issue? Disappointing Facts About the Black-White Wage Gap, FRB San Francisco, 2017

10 What s the issue? Women in the US Population vs. Women in the C-Suite Total US Population C-Suite Roles Total US Population C-Suite Roles 52% ---- All Women % 19% ---- Women of Color % Women in the Workplace 2017, McKinsey & Company

11 What s the issue? Population in management by gender and race; Women in the Workplace 2017, McKinsey & Company

12 Why should we care?

13 Employer Brand

14 Income Inequality a Top Concern 2018 Millennial Survey, Deloitte

15 Diversity Linked to Employee Loyalty 2018 Millennial Survey, Deloitte

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17 Washington State Pay Equity Law Covers all employers Prohibits discrimination based on gender for compensation between Similarly Employed workers Work for the same employer Job requires similar skill, effort and responsibility Job performed under similar working conditions Cannot deprive employees of Career Advancement Opportunities Retaliation prohibited Violation occurs at adoption of a discriminatory practice and each time compensation is paid thereafter

18 Oregon State Pay Equity Law Covers all employers Salary history inquiries prohibited Update employment posters prior to January 1, 2019 Prohibits discrimination of all protected classes in compensation between Comparable Character work Work that requires substantially similar knowledge, skill, effort, responsibility and working conditions

19 Oregon State Pay Equity Law (cont d) Compensation includes Wages, salary, bonuses, benefits, and equity based compensation Allowable pay differences Seniority or Merit System Work Location Education / Training Experience Piece rate work or similar Combination of above Safe Harbor for employers that conduct a pay equity analysis, at minimum every 3 years

20 What can we do? Understand the organization s current state.

21 Population Snapshot Gender Snapshot Organization Ethnicity Snapshot Organization 42% 58% Women Men Gender Snapshot Seattle 49% 6% 13% 3% 4% 1% 10% 18% Ethnicity Snapshot Seattle 7% 14% African American Asian American Hispanic Native American Pacific Islander Two or More Unspecified White 50% 50% 63% 7% 1% 1% 7% 0%

22 Uncontrolled Pay Snapshot Average Pay by Gender Average Pay by Ethnicity FT PT

23 Average Compa-ratio by Ethnicity with Tenure

24 Compa-ratio Compa-ratio = comparing employee pay to a data point, often pay range midpoint An employee whose pay is the same as the range midpoint has a compa-ratio of 100% (or 1.0)

25 Average Compa-ratio by Gender & Ethnicity

26 Average Compa-ratio by Job Level & Gender

27 Average Compa-ratio by Job Level & Ethnicity

28 Pay by Job Ethnicity with Tenure

29 Avg Compa-ratio by Job, Gender & Ethnicity Female Male

30 Compa-ratio Average New Hire Compa-ratio vs Existing 105% 100% 95% 90% Admin Production Supervisor Manager New Hires Female New Hires Male Existing Female Existing Male

31 Merit Pay Increases by Ethnicity & Job Group 3.5% 3.3% 3.1% 2.9% 2.7% 2.5% 2.3% Job Group 1 Job Group 2 Job Group 3 African American Asian Hispanic Native American Pacific Islander Two or More Unspecified White

32 Average Promotion Pay Increase Job Group Nonexempt 7.0% 7.4% 7.6% 8.1% Exempt 8.3% 8.7% 8.8% 9.3% Management 9.5% 10.2% 10.1% 9.6% By job or job grade By gender and ethnicity Include supervisor, years of service and performance data if available Promotional Guidelines Report, World at Work, 2016

33 Is there a glass ceiling?

34 Actual Average Bonus as % of Base Pay Bonus Pay by Gender 20% 16% 15% 15% 11% 10% 8% 9% 8% Female Male 5% 5% 5% % Admin Professional Supervisor Manager Bonus Category

35 % of Pay Growth Over Tenure Voluntary Turnover with Average Pay Growth 20% 18% 16% 16% 14% 12% 12% 11% 10% 8% 9% 8% Female Male 6% 5% 4% 2% 0% 2% 1% 1% 0% < 6 Months 6 Mos-1 Year 1-2 Years 2-3 Years 3-4 Years Years of Service Prior to Separation

36 What are you doing at your organization?

37 What can we do? Rethink...

38 Equality vs. Equity

39 What happens when we change the fence?

40 Review Required Job Qualifications Llamas-Blogger

41 Job Qualifications and Degree Inflation Jobs that used to require a high school diploma now require a bachelor s degree 61% of employers have rejected applicants with the requisite skills and experience but no degree College grads in middle-skill positions: Cost more Less engaged Higher turnover Harvard Business School, 2017

42 Is a degree absolutely necessary? Percent with Bachelor s Degree 32% US Population with Bachelor s 22% 52% 15% 36% AFRICAN AMERICAN ASIAN HISPANIC WHITE U.S. Census Bureau 2015 Report

43 Hiring Sources Sources of Hire 2017, SilkRoad

44 New Hire Pay Placement Process

45 Merit Increase vs. Pay Range Placement Annual assessment of pay in range Tied to quartile (more general) or compa-ratio (more precise) Demonstrated skills Overall relevant experience Demonstrated knowledge, certifications or other education Short-term and long-term job performance Other job-related factors important to the organization

46 Promotion Pay 1. Follow something similar to the new hire process + performance 2. Establish promotion increase guidelines Move to minimum of the range or By job group, FLSA, etc. Job Type < 5% 5-9% 10-14% 15-19% 20-29% 30% + No Limit Nonexempt 4% 29% 29% 20% 11% 2% 5% Exempt 3% 19% 35% 24% 13% 1% 4% Management 4% 11% 24% 24% 18% 0% 19% Promotional Guidelines Report, World at Work, 2016; Maximum Promotional Increase

47 Mentorship/Leadership Development Program 77% of companies with mentoring programs say they improve retention and job performance Supported by senior leadership Formal program with mentors and role models Program offers: Ability to gain experience relevant to advancement Access to visible, challenging assignments Development of informal and formal networks Association of Training and Development. Millennial Survey 2018, Deloitte

48 Consider Non-Traditional Work Schedules 2018 Washington State Employee Benefits Report, WA SHRM

49 Employee Retention Programs 47% Lower Attrition Diversity & Inclusion Employee Network T-Mobile, Strike Out The Gap, 2018

50 Change the Fence View HR programs and process through an equity lens Recruitment and hiring Pay actions Performance management and merit systems Retention and development programs Think long-term, holistic solutions Engage employees at all levels to help deconstruct and rebuild systems

51 What other ways are there to change the fence?

52 What can we do? Communication

53 Transparency Spectrum

54 Transparency Matrix Inspired by Sandrine Bardot, Compensation Insider

55 Education for Managers Unconscious bias training (individual behaviors) Race and social justice training (systemic/processes) Gender and racial/ethnicity wage gap information Big picture data Your organization s data Hiring and implicit bias training Pay administration guideline training New hire, promotion, merit, etc. Employee conversation training Pay and career advancement

56 Employee Perception of Pay Gap I believe men and women at my company are paid equally for equal work Men = 78% agree Women = 60% agree Global Gender Pay Gap Survey, US Data, Glassdoor, 2017

57 Employee Communication Keep it simple Personalize the message On-going Think like marketing! Consider Total compensation statements Career advancement and pay progression conversations Unconscious bias training Race and social justice training Sharing organization s pay equity data

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59 Final Thought

60 I do not demand equal pay for any women save those who do equal work in value. Scorn to be coddled by your employers; make them understand that you are in their service as workers, not as women. Susan B. Anthony The Revolution, Women's Suffrage Newspaper October 8, 1868

61 Thank you! Shannon Drohman Principal Erin Wolford Consultant