Pay transparency vs pay equity, and why it matters to HR

'HR has a role to play' in pay transparency laws: pay equity PhD

Pay transparency vs pay equity, and why it matters to HR

Pay transparency legislation is becoming more prevalent in Canada and elsewhere around the world as governments are attempting to address pay gaps due to gender and other factors. But the legislation has “no teeth” say opponents to the laws, as they don’t actually enforce pay equity.

B.C. and Ontario both recently enacted Pay Transparency Acts requiring some organizations to begin reporting pay gaps in their workforces, in addition to posting salary and wage ranges on publicly listed job openings. The laws also ban employers from asking potential hires for compensation history and retaliating against employees who discuss their wages.

Dr. Sylvia Fuller, professor of sociology at the University of British Columbia who has conducted research into pay equity, spoke with HRD about the differences between pay transparency and pay equity and why it matters to HR.

“HR has a role to play in helping encourage corporate shifts of norms and values,” she told HRD. “Certainly, HR can help facilitate greater transparency in their organizations.”

Pay transparency laws are too broad to be truly effective

The first reports that came back last month as a requirement of B.C.’s new Transparency Act revealed that men are paid more in government jobs in the province, including at some of its largest Crown corporations. While the stats are valuable for tracking data, Fuller said, they don’t do enough to incentivise organizations to make significant changes to their processes.

 “My concern with that kind of approach, where it's so broad, is that we're used to gender pay gaps,” she said. “People know there's a gender pay gap – there's been a gender pay gap for ages and it tends to be normalized, so that people come to expect it, they don't necessarily see it as evidence of unfairness.”

Even with a “purportedly progressive” government, Fuller said. B.C. is second only to Alberta in its pay equity gap, with women earning 16.7% less than men in B.C. compared to the national median average of 12.9%. The gap also widens even further for Indigenous, racialized and newcomer women, who earn 65, 67, and 71 cents for every dollar men make, respectively.

“The government is really kind of relying on public pressure and of loss of faith, loss of the sense that you're a good corporate citizen, to motivate companies to do something about that gap and to make it improve over time,” Fuller said. “That of course, is contingent on the public caring.”

More detailed data needed for pay transparency laws to work

In 2017 Britain adopted pay transparency laws that required organisations to begin reporting pay gaps in their workforces, but with the added requirement that names be included in the data. The reporting started with large public corporations, similarly to B.C., and when outlandish pay gaps between female and male stars at the BBC were reported in the media, there was a public outcry to address the problem.

Fuller and her research team conducted a study of the newspaper coverage of this event and analyzed the outcomes, and pointed out that personalizing the data is how change can be made in corporations.

“You could clearly see the evidence that this was clearly not fair. There was much more public attention to it,” Fuller said. “And what we were able to track in our research was actually a shift in how the newspapers talked about gender pay gaps … to more structural explanations that talked about the organizational cultures, that looked at the barriers that women were facing. So there actually was a shift there that did suggest that it was delegitimizing the gender pay gap.

“I'm not sure that the legislation that we're seeing in B.C. has the potential to do that.”

HR can help to shift the pay gap in their organizations

Even if the legislation is sluggish, there are ways that HR leaders can help to close gender pay gaps in their own organizations, Fuller said, starting with addressing “formal and informal practices and structures” that lead to inequality within their work processes. This includes clear hiring metrics, blind hiring methods where applicable, and more standardized employee evaluation.

HR professionals can also act as allies when employees are pursuing wage information to assess if they are being compensated fairly. Making de-identified wage information readily available to staff can help with this.

“Go to bat for them if it seems like their compensation isn't lining up with what they should be earning, and particularly be attentive to where there seems to be systematic differences for different groups in the organization,” Fuller said. “HR can help facilitate greater transparency in the organization so when folks are looking for information, trying to figure out whether or not they're being treated fairly, they that they can find that more detailed, granular data to help them understand what their compensation is.”

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