Leading the Pay Equity Charge

In 2011, Austria became the first country to introduce the Gender Pay Transparency Law which required Austrian-based companies of 1,000 employees to publish a pay report every other year. In later years, this requirement would find itself extended to organizations with 500, 250, and 150 employees. The intention behind the law was to close the gender wage gap by creating a system of accountability for organizations and to boost the pay of women. It is often quoted that on average, women receive 23% less in the US than their male peers and 20% less in Austria. As compensation analysts, we find it important to mention that this average varies from one organization to the next; therefore, to understand if the wage gap problem exists within your organization then an annual pay equity analysis is a must. Nevertheless, the wage gap remains a global issue that negatively impacts individuals and is further exasperated when additional identities are considered outside of gender (i.e. race/ethnicity, sexual orientation, etc.).

Did intentions match results?

A recent study conducted by Andreas Gulyas, Sebastian Seitz, and Sourav Sinha from the University of Mannheim found that the intention behind the pay transparency law was not met after 10 years of its introduction. Researchers found that pay transparency did not impact the wages of men or women; rather, it saved the company’s most valuable asset: its people. Following the policy, there was an increase in the retention rates of employees which indicated higher job satisfaction. The Society for Human Resource Management (SHRM) estimates that on average the cost of replacing an employee can range from six to nine months of salary.

Making the right move

If minimizing unnecessary expenses remains a priority for an organization, I believe that it is imperative that organizations exhaust their options in not only setting their intentions but ensuring that they are reaching them through thoughtful actions. Executing annual pay equity analysis is one way that organizations can remain intentional in not only ensuring that wage discrimination does not exist within the organization but also confirming that the work you are doing to create an equitable workplace is working. A recent Glassdoor survey in the US presented that 72% of employees are less likely to work for an organization where a wage gap exists. The mission of Equal Pay Group is to ensure that who you are, what you say, and how you pay are all aligned so it’s easier for your employees to know that they found a forever home with you. There are many things you can replace, but great people are difficult to come by.¬†

Research: https://www.crctr224.de/en/research-output/discussion-papers/archive/2020/DP194v1