1、Employers continue commitment to pay equity in a turbulent year The state of pay equity in 2023 2022 was a turbulent year,with labor market challenges,wage growth,a cost-of-living crisis,ongoing business transformation,and concerns of a possible economic downturn challenging traditional approaches t

2、o compensation management.Pay equity focus shifted as states began passing pay transparency laws and the Great Reevaluation fueled job moves and pay compression concerns.This whitepaper provides the key facts and guidance you need to adopt a proactive stance on pay equity in order to close pay gaps

3、and ensure that pay fairness is embedded across compensation management practices and handled in a sustainable way.2Executive SummaryIn 2022,we saw how increasing unpredictability as well as the compounding challenges of the pandemic and economy have impacted compensation management.Concerns around

4、pay equity remain high amongst stakeholders,as employees,investors,and consumers have all been affected.Against this landscape,there were some key developments in approaches to pay equity this year as revealed by our 2023 Compensation Best Practices Report.Wage growth dominated the first half of 202

5、2 First,pay became more important in the context of a cost-of-living crisis.Employee sentiment surveys during 2022 ranked pay as a primary concern,and strong employee bargaining power led to wage growth.Employees high expectations about pay made it difficult for employers to maintain pay equity in a

6、 fast-moving market and led to pay compression and pay inequity concerns.Pay transparency dominated the second half of 2022 In the second half of the year,pay transparency became the hot topic as new legislation was passed or proposed to require the disclosure of pay ranges in job advertisements.Emp

7、loyers scrambled to take action,with some being called out for avoidance or exploitation of loopholes.However,smart business leaders were quick to realize the potential impact on brand reputation and urged their HR functions to act.The first movers were those who had already implemented fair and equ

8、itable job architecture and pay structures and could post pay ranges transparently for all jobs,irrespective of whether they were required by law to do so.These organizations recognized that pay transparency is not a risk for exposure but an opportunity to communicate their pay strategy and demonstr

9、ate their commitment to reducing bias and pay inequity.There will be a shift from pay equity compliance toward equitable workplaces for all in 2023 Increasing pay transparency means that employees will not only see the pay ranges of their peers but also of positions higher and lower than them.As thi

10、s happens,the uncontrolled pay gap will become a greater focus.Organizations need to understand the systemic issues that have led to the inequity of opportunity that drives pay gaps for women and people of color.We are seeing a slow shift in perspectives from a compliance-focused equal pay exercise

11、to a desire to create an equitable workplace for all.Now is not the time to deprioritize your commitment to closing pay gaps We were asked repeatedly in 2022 whether there might be a deprioritization of pay equity efforts as organizations potentially cut back on costs in anticipation of a recession.

12、However,heightened employee and stakeholder expectations will make it hard to do this,and those that have started their journey and particularly those that stated a commitment to pay equity will damage their reputation if they halt any efforts now.In todays volatile labor market,you need to invest i

13、n compensation management best practices to navigate pay compression,pay equity,and pay transparency.Addressing pay equity will rapidly become a required part of every single pay decision and pay conversation.Dont doubt the importance of building out sustainable programs,or you could risk putting yo

14、urself at a competitive disadvantage.Ruth ThomasChief Product EvangelistVicky PeakmanDirector of Social Impact3The commitment to pay equity remains strongIn 2022,we saw a huge jump in organizations prioritizing pay equity as a current initiative.This year,most organizations(63 percent)remain committ

15、ed(down slightly from 66 percent in 2022).However,we see 69 percent of top-performing organizations increasing their commitment compared to 67 percent last year.Top performers are more likely to recognize that morale,retention rates,and performance can all improve when workers have confidence that t

16、heir employer values them,as evidenced by this commitment to pay equity.Is pay equity analysis a planned or current initiative at your organization?Has your organization conducted pay equity analysis?Source:Payscales 2023 Compensation Best Practices ReportSource:Payscales 2023 Compensation Best Prac

17、tices ReportYesNoUnsure63%23%14%Dedicated comp functionComp maturity of 4 or abovePayscale customersTop performers72%72%69%69%*totals are not exactly 100%due to rounding No,neverYes,but manyyears agoUnsureYes,everyfew yearsYes,annuallyYes,continuously2023202229%24%17%20%16%17%7%15%17%13%14%13%Taking

18、 into consideration this ongoing level of commitment,we saw the number of organizations conducting pay equity analysis increase,with 62 percent now undertaking analysis compared to 54 percent last year.Reasons to undertake pay equity are changing For those still seeking to get buy-in to pay equity i

19、nitiatives,take note:The key reasons to address pay equity remain value-led,with employers believing that it is part of a proactive talent strategy and central to their organizations values.With emerging pay transparency legislation drawing attention to pay equity,it was not surprising to see that l

20、egislative compliance rose to be the third most important reason for undertaking pay equity analysis(up from fourth in 2022).4Why is pay equity a planned or current initiative?(rank top 3 in order of importance)Source:Payscales 2023 Compensation Best Practices ReportFirst(most important)SecondThird0

21、%10%20%30%40%50%60%70%80%LegislativecomplianceCentral tocompany valuesPart of ESGstrategyPart of proactivetalent strategyResponse toemployee feedback13%26%35%16%13%26%30%24%23%17%8%7%14%24%24%5Pay equity needs to bean ongoing program As we have heard many times,enacting a pay equity strategy is not

22、a one-and-done activity.In fact,its better represented as a journey toward developing best practices,investing in systems to continuously monitor pay equity,and creating the cultural environment required to maintain fair pay as an integral part of compensation management and talent strategy.As more

23、organizations act this year,we see that the progress of organizations overall is still at an early stage of maturity,with more focused on diagnosing and measuring pay gaps rather than implementing remediation measures or committing to actions to solve inequalities in the workplace.How far does your

24、organization intend to take pay equity in the next year or two?Source:Payscales 2023 Compensation Best Practices ReportWe will make a commitment to understanding pay equity41%We will work to get internal alignment on how to approach pay equity38%We will measure our pay gaps(conduct pay equity analys

25、es)38%We will establish procedures to maintain pay equity30%We will remediate to close pay gaps27%We will do a remediation analysis to budget for closing pay gaps25%We will set goals to actively solve inequalities within the workplace24%We will investigate systemic reasons for inequality within the

26、workplace21%We are not interested in doing this or dont feel we need to13%Other6%6Despite this progress,we can see that 25 percent of organizations are still not prepared to tackle pay equity.A higher number this year also indicated they could not afford to do this,up to 18 percent from 12 percent l

27、ast year.This may reflect the economic climate,but it also likely shows a lack of awareness of the demonstrable business benefits pay equity brings.Why is your organization not interested in pay equity analysis in the next year or two?Source:Payscales 2023 Compensation Best Practices ReportOverallOu

28、r org isnt prepared to do this 25%Our org is too small for pay equity analysis to be statistically meaningful 24%Our org measures pay equity and we know we dont have a problem 23%Other20%Our org cant afford to do this right now 18%Our org doesnt measure pay equity but we believe we dont have a probl

29、em 18%Decision makers in our org believe pay gaps are nonsense 6%NoUnsureYes|for the controlled gapYes|for both the controlledand uncontrolled gapYes|for the uncontrolled gap47%38%23%13%19%12%12%4%10%21%20232022NoUnsureYes|for the controlled gapYes|for both the controlledand uncontrolled gapYes|for

30、the uncontrolled gap41%34%23%21%15%20%16%13%5%12%202320227Uncontrolled pay gaps are moving up the agenda In our 2023 Gender Pay Gap Report,the uncontrolled gender pay gap decreased by one percent to 17 percent,or$0.83 for every$1 that men earn.Considering the backdrop of the cost-of-living crisis an

31、d the ongoing impact of COVID-19 on women and people of color in particular,it is not surprising that not much has changed since last year.Unless organizations start to measure and address uncontrolled pay gaps as well as wealth inequality across organizations,these gaps will not close.There does ap

32、pear to have been a shift,however,as more organizations are committing to calculating their uncontrolled pay gaps.The percentage of organizations that know their uncontrolled gender pay gaps has increased from 21 percent to 25 percent,and the percentage that know what their uncontrolled race/ethnici

33、ty pay gaps has increased from 16 percent to 22 percent.Do you know what your gender pay gap is?Do you know what your race/ethnicity pay gap is?Source:Payscales 2023 Compensation Best Practices ReportSource:Payscales 2023 Compensation Best Practices ReportLooking for a pay equity analysis solution?P

34、ayscale can help you monitor salaries and close pay gaps simply and continuously.Learn more25%an increase from last years 21%22%an increase from last years 16%8More organizations are investing in remediation of pay gaps In addition to doing more to understand their uncontrolled pay gaps,more organiz

35、ations are starting to tackle the reasons behind them,which is a positive move.The percentage of organizations doing something to address their uncontrolled pay gaps increased.These pay gaps highlight the lack of diversity and representation in higher paying jobs and across job levels and can bring

36、attention to barriers to entry or progression for certain groups of employees.Only when we address these barriers will we see start to these pay gaps close.In 2023,we predict there will be a growing focus on why progress toward closing uncontrolled pay gaps is so slow.More U.S.organizations will be

37、calculating their pay gaps as well as doing legal pay equity checks partially due to the expansion of pay-data reporting requirements and pay transparency legislation,but also due to ESG and employee pressure.Fixing the controlled pay gaps is just ensuring equal pay for equal work.Fixing the uncontr

38、olled pay gaps is ensuring equality of opportunity in our workplaces and society.Are you doing something to address your pay gaps?Source:Payscales 2023 Compensation Best Practices ReportYes|for the controlled gap(employees with the same job characteristics)Yes|for the controlled and uncontrolled gap

39、Yes|for the uncontrolledgap(overall regardless of job)UnsureNo|we are not addressing at this time18%23%15%14%4%9%28%26%34%27%*totals are not exactly 100%due to rounding 202220239Pay compression is having an impact on pay equity Last year,we saw record wage increases driven by an active labor market,

40、with workers choosing to move roles as part of the Great Reevaluation in a bid to increase their pay relative to rising living costs.As a result,pay compression became a new compensation challenge with starting salaries for external hires often exceeding current employees pay.Despite predictions of

41、labor markets cooling,this remains an ongoing concern in 2023.With pay compression on the rise,pay equity concerns increased.With our clients,we observed the best results from those who adopted a real-time approach to monitoring internal versus external equity to ensure that it was maintained for sk

42、ill levels,experience,and/or seniority.It was not surprising to see that 42 percent of organizations(with rounding)are now doing something to address pay compression,and 10 percent do so by making frequent market adjustments.Are you concerned about pay compression going into 2023?Yes55%27%18%NoUnsur

43、eNothing;we dont have the resources to address pay compression We are monitoring pay compression but havent made any decisions yet We are giving base pay increases to impacted employees to adjust pay to market We are giving bonuses or other incentives to impacted employees because we are unwilling o

44、r unable to adjust base pay We are combining modest base pay increases with other incentives such as bonuses,stipends,or stock/equity to impacted employees We avoid pay compression by proactively and frequently adjusting pay 10%10%33%21%5%5%Unsure13%Other2%Are you concerned about pay compression goi

45、ng into 2023?Source:Payscales 2023 Compensation Best Practices ReportGet ahead of the pay increase cycle With Payscales Compensation Planning solution,you can plan for regular pay raises to keep up with inflation,reward performance,and adjust to the changing market,all while maintaining pay equity.L

46、earn more10Pay transparency legislation has become a new strategic focus for closing pay gaps Recent pay transparency legislation is forcing organizations to swiftly and fundamentally change how they approach pay.We can see just how impactful these laws have already been with 48 percent of organizat

47、ions confirming that legislation is driving change in their compensation practices which are split between investing in equitable pay structures for the first time(11 percent)and improving pay data and equity in the pay structures they already have(37 percent).In fact,becoming more transparent about

48、 pay was ranked as the most important compensation activity for the next few years by our survey participants.Has recent pay transparency legislation driven your organization to change or improve your compensation practices?Percentage of organizations who selected the following as“more important”rat

49、her than less important or unchanged for their organization in the next few years versus today.Yes|we are rapidly trying to improve our pay data,pay structures,and pay equityYes|we are investing in equitable pay structures for the first timeOtherNo|we already have pay transparencyNo|we are resisting

50、 pay transparency11%11%11%30%37%48%Hiring a dedicated compensation professional(for the first time)Enlarging the compensation team Incorporating new sources of compensation dataBecoming more transparent about pay Expanding total rewards packages with variable pay Addressing pay compression Identifyi

51、ng and addressing pay inequity Location-based pay strategies to accommodate remote work or a more distributed workforce Setting or updating a standard pay philosophy and/or strategy56%52%51%47%46%44%36%23%21%11Its essential to invest in the basics of compensation management Whilst these new laws are

52、 forcing pay disclosures in job postings,there is also a need to take more proactive measures such as revisiting job architectures and pay frameworks,performing pay equity analyses,identifying existing gaps,and implementing manager communication training.Our 2023 Compensation Best Practices Report h

53、ighlighted the barriers to organizations pay transparency aspirations:33 percent dont have organized pay structures 18 percent lack confidence in their pay strategy or structures15 percentare concerned about exposing pay inequity issues What is preventing your organization from reaching at least lev

54、el 3 on the pay transparency spectrum?Source:Payscales 2023 Compensation Best Practices ReportWe dont have organized pay structuresLeadership is unconvinced of the merits of pay transparencyNothing;we dont want to be transparent about pay We are not confident in our pay strategy or structures We lac

55、k confidence in the accuracy of our salary dataWe are concerned that we have pay inequity issues Other15%33%27%19%18%16%15%12We are encouraged by the level of activity pay disclosure laws are generating.However,there is still the potential for those most impacted by pay gaps to be detrimentally affe

56、cted.In many cases,we know that salary ranges are not being listed at all,and in other cases the ranges posted are so broad as to be worthless for the candidates and current incumbents.Also,many of the new laws do not require transparency over total compensation,so bonuses,performance pay,equity,and

57、 benefits can all be subject to additional negotiation.Only with a commitment to holistically improve pay programs and move toward clearer,more consistent and transparent pay management are we likely to see the outcomes this legislation is targeting.The future of pay is transparent Recent pay transp

58、arency legislation is forcing organizations to swiftly and fundamentally change how they approach pay.The Pay Transparency Solution by Payscale can not only help you get pay right but gives you the added confidence you need when sharing pay information internally and externally.Learn more13Pay equit

59、y is increasingly being viewed as an integral part of Environmental,Social,and Governance(ESG)strategy Despite some pushback due to recessionary concerns and the underperformance of some ESG-focused funds,many CEOs and investors are unwavering in their commitment to balance company performance and E

60、SG initiatives in 2023.Organizations best able to demonstrate an accurate understanding and explanation of their pay gaps will be viewed as having greater transparency,translating into higher ESG scores and a positive view from regulators.Our 2023 Compensation Best Practices Report confirmed that co

61、ntrolled pay gaps are the most common type of ESG reporting we asked about(22 percent),with the next most common being uncontrolled pay gaps(13 percent)and distribution of the workforce(13 percent).Only 11 percent of organizations are reporting their CEO pay ratios.Wealth inequality,as well as the d

62、ifferences between those who are employed at higher levels in the organization and those at lower levels,are in many of the ESG frameworks that organizations are starting to adopt.We expect to see this rise,especially if prices continue to increase at a higher rate than average wages and if layoffs

63、continue in organizations with very high executive pay.Which of the following are you reporting on as part of your ESG reporting?Source:Payscales 2023 Compensation Best Practices ReportUnsureControlled pay gaps Uncontrolled pay gaps Distribution of workforce Skills/training metrics CEO pay ratios Mi

64、nimum wage vs.living wage percentages Other0%40%We do not do ESG reporting 31%22%13%13%12%11%9%0.7%30%14ESG reporting begins with diversity metrics To understand whether there is segregation within organizations vertically and/or horizontally employers need to know the protected characteristics of t

65、heir employees.Almost half of organizations are now requesting identity information for gender and race/ethnicity,probably due to the EEOC reporting requirements that have been in place for a while.It is encouraging to see employers requesting information for other protected characteristics,such as

66、disability(24 percent),veteran status(20 percent),and LGBTQ+status(14 percent).What is not known are the declaration rates for each of these.There is more work to be done to create the cultural environments for employees to feel safe enough to self-identify.Along what dimensions are you measuring di

67、versity among your current employee group?Source:Payscales 2023 Compensation Best Practices ReportGenderRace/ethnicity/national originAgeDisabilityUnsureVeteran statusNoneLGBTQ+ReligionOther46%43%34%24%23%20%14%10%1%19%15When organizations have sufficient data for these characteristics,it is importa

68、nt to break the numbers down by the level and area within the business.It is not surprising that there were fewer respondents to our survey doing this,as they may not yet have a high enough declaration rate in all levels and areas.By building up a picture of the diversity within your organization,yo

69、u will understand the impact of pay policies and practices and what is leading to uncontrolled pay gaps and wealth inequality.Along with pay equity,the ESG framework is not going away.Organizations will increasingly be held accountable for their impacts on society.Thats why its better to get in fron

70、t of it and start collecting the data you need to provide the metrics required for reporting and more importantly for fixing inequity within your organization.If you are measuring diversity among your current employees,at what levels are you measuring?Source:Payscales 2023 Compensation Best Practice

71、s ReportJob levelJobJob familyUnsureOrganizational departmentsPay bandLocationOtherExec/VP/Manager22%21%12%10%8%7%4%3%12%ConclusionUltimately,addressing pay equity is a matter of integrity.Its about being authentic when you say your employees are your greatest asset by treating them with fairness.Be

72、ing transparent and demonstrating that your organizations approach to pay is fair and equitable shows your employees that you value them.At Payscale,our mission is to make sustainable fair pay a reality.To do this,we help employers like you make pay equity an integral part of everyday compensation m

73、anagement practices.We provide compensation management software and consulting services to help you eliminate pay gaps and maximize talent investments by making fair,equitable,and appropriate pay decisions.We also have solutions to help you develop a compensation strategy,create equitable pay struct

74、ures,manage pay compression,and achieve pay transparency.Compensation solutions from Payscale Whether youre setting your compensation strategy or seeking salary data unique to yourindustry,compensation management solutions and services from Payscale simplify the process.Make pay equity central to pa

75、y strategy The constant evolution of people within an organization makes pay equality a moving target,but modern compensation software from Payscale can help you monitor salaries and close pay gaps simply and continuously.The future of pay is transparent Recent pay transparency legislation*is forcin

76、g organizations to swiftly and fundamentally change how they approach pay.The Pay Transparency Solution by Payscale can not only help you get pay right but gives you the added confidence you need when sharing pay information internally and externally.*Check out Payscales pay transparency legislation

77、 trackerLearn moreLearn more1617Additional resourcesTo learn more,check out additional research and insights from Payscale,including:Read reportRead whitepaperLearn moreRead reportRead reportRead whitepaperRead reportLearn more2023 gender pay gap reportHow to advocate for pay equity analysis whitepa

78、per Pay transparency legislationPay equitystarter kit2023 compensation best practices reportThe new era of pay equity guide Does pay transparencyclose the gender pay gap?The pay equity and remediation handbook18About PayscaleAbout PayscaleAs the industry leader in compensation management,Payscale is

79、 on a mission to help job seekers,employees,and businesses get pay right and to make sustainable fair pay a reality.Empowering more than 50 percent of the Fortune 500 in 198 countries,Payscale provides a combination of diverse and dynamic data sources,experienced compensation services,and scalable software to enable organizations such as Angel City Football Club,Target,United Healthcare,Gainsight,eBay,and The Washington Post to make fair and appropriate pay decisions.To learn more,visit .Pay is powerfulPay is powerful