There seems to be some confusion in the marketplace when it comes to determining the point of comparison for equal pay. To what should pay be equal?
For some, the immediate thought would be that pay should be linked to market value. And this happens because traditionally companies have done remuneration benchmarking as part of their annual HR process. This is what we refer to as external parity. It has no direct bearing on equal pay although it is important in the context of scarce skills justification.
Internal parity, i.e. the comparison of employees of the same company doing the same, substantially the same, or similar work, is the key issue of equal pay. Pay scales are designed within organisations in accordance with their business models and of course affordability and the legislation seeks to ensure non-discriminatory pay practices internally.
Most organisations manage fair remuneration by evaluating jobs and using a grading system. Once all jobs have been graded, pay scales are developed to provide the framework to define the remuneration bands of the various grades. This enables differentiation based on the scope and complexity of the jobs but also provides a progressive and fair pay structure.
Recruiting & Retaining Scarce Skills
Benchmarking is an important process in determining your competitiveness for talent. By assessing your pay points with those of market, you will be in a better position to understand how to successfully recruit, and more importantly retain, the essential skills you need to deliver service to your clients. A recent benchmark report can also be an important supporting document when it comes to justifying pay differentials for individuals who would be considered core and who possess scarce or critical skills.
Global Business Solutions partners with Emergence Growth to provide holistic solutions to ensuring equal pay compliance and implementing practical remuneration solutions that drive organisational success. Talk to us today for more information on how we can assist you.