EQUITY IN ACTION: IMPLEMENT FAIR PAY MANAGEMENT MECHANISMS
In pursuing workplace equity, we’ve examined the critical steps: establishing equivalent worth, developing a job grading structure, utilizing comprehensive salary surveys, and implementing a well-defined salary scale. These foundational elements create the framework for fair pay.
But the journey continues. Transitioning from establishing the framework to actively managing pay is where equity flourishes.
It’s time to take the final step: implementing fair pay management mechanisms. This ongoing process ensures that your meticulously crafted pay structure remains relevant and equitable long-term. Without equitable management, even the most robust compensation program can falter, leading to pay disparities and inequities.
This post examines the essential mechanisms for ongoing pay management, empowering your organization to cultivate a genuinely equitable and fair workplace.
Why traditional pay progression fails to achieve equity
Pay management mechanisms are the processes and policies that govern how your people move through your established salary ranges. They drive your compensation program, ensuring ongoing equity within your organization.
However, traditional approaches to pay progression often miss the mark when it comes to fairness. Why? Let’s examine two common methods:
- Time-based steps. While clear, predictable, and easy to administer, this approach suffers from a critical flaw: everyone receives an increase regardless of performance. Someone exceeding expectations gets the same raise as someone barely meeting minimum standards. This can be incredibly demotivating for high performers and fails to recognize individual growth.
- Pay-for-performance or merit increases. This method aims to reward top performers with higher raises, but it, too, often falls short. Pay increases are frequently too small to truly differentiate meaningfully between performance levels. Additionally, basing salary adjustments solely on annual performance reviews is problematic. Performance can fluctuate year to year, meaning a one-time “good” year can lead to a permanent salary increase, even if performance later declines.
Both approaches fail to create a truly equitable pay structure, lacking the flexibility and nuance to accurately recognize individual contributions and growth. This can lead to pay gaps, dissatisfaction and, ultimately, a less equitable workplace.
To create a truly equitable pay system, organizations must move beyond outdated models and explore more objective, transparent, and equitable approaches to pay progression.
A truly equitable pay management system hinges on transparency and clearly defined criteria for progression. This means establishing a clear and consistent pathway for employees to advance through the salary scale based on objective measures such as skills, competencies, and contributions aligned with their jobs and the organization’s mission.
Think of it like a roadmap. Every employee should understand the route to progress within their role and have equal opportunity to reach their career goals. This fosters a sense of fairness but motivates staff to develop their skills and contribute meaningfully.
Developing a system for staff progression through the salary scale
Creating a transparent and fair system for salary progression is imperative for fostering a culture of equity. Here are key strategies to achieve this:
Skills-based progression
Implement a framework that objectively measures staff skills, linking it directly to pay progression. This means clearly defining the skills and competencies required at each level of the salary range and using standardized assessments to measure employee skills against these levels. Be transparent about how acquiring new skills or demonstrating increased expertise translates to salary increases or promotions. This approach ensures that pay progression is tied to tangible growth and development.
Regular reviews and updates
The market and your organization are constantly evolving. Regularly review and update your salary structure and progression system to demonstrate a commitment to fair pay. This allows you to maintain market competitiveness, address any internal pay disparities that may arise, and provide opportunities for employees to move through the salary range based on the growth of their skills and the impact of their contributions.
Benefits of a structured progression system
But why go to all this effort? Because a well-structured approach to pay movement offers significant benefits for both your staff and your organization.
- Increased transparency and trust. Employees understand how pay decisions are made, fostering a sense of fairness and trust in the organization.
- Enhanced motivation and engagement. Clear pathways for advancement motivate employees to invest in their development and contribute their best work.
- Reduced pay disparities and improved retention. Objective criteria minimize the risk of bias and discrimination in pay decisions, promoting equity and increasing employee satisfaction.
How Birches Group’s Community™ Skills can help
Developing and implementing fair pay management mechanisms can be challenging. But your HR team doesn’t have to go on this journey alone.
At Birches Group, we believe that pay movement should be tied to the development and growth of staff’s skills and experience. As employees gain experience, they develop a deeper understanding of their role and accumulate the skills needed to help them be more effective and produce higher-quality work.
Birches Group Community™ Skills provides a way to measure this experience. Organizations can use our framework and tool to structure their compensation systems, rewarding employees for growth and development within their roles, rather than solely relying on performance metrics. Organizations can link their compensation administration to the progression of skills in any number of ways, from assessing and setting the appropriate starting salary based purely on candidates’ skill levels during recruitment to managing pay movement within the salary range and tailoring learning and development assignments to guide staff development and career pathing.
Contact Birches Group today
Implementing fair pay management mechanisms and a structured progression system is not about ticking boxes. It’s about fostering a workplace where every employee feels valued, recognized, and rewarded fairly. By embracing the five-step approach to workplace equity, your organization can create a culture of transparency, trust, and opportunity.
We understand that this journey can be complex. That’s why we encourage you to seek guidance from experts who can help you navigate the intricacies of building an equitable compensation program.
Is your organization ready to achieve workplace equity? Contact Birches Group today. Our team of experienced consultants can provide the expertise and support you need.
Carla is a part-time copywriter on our marketing team in Manila. Before shifting to freelance writing in 2020, she worked as a marketing and communications specialist at the offices of EY and Grant Thornton. She has written about HR and career development for Kalibrr.
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