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Avoid the Traps of Unequal Pay

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On average, women are paid less than men, but the difference may be
smaller than you think. You may have heard widely quoted statistics which can
be misleading, such as the belief that women earn 76 cents for every dollar
that men make. While men do make more, the gap narrows when you adjust
for differences in job category and tenure. Still, a gap exists, and one
compensation management software company calls it the "uncontrolled
gender pay gap.

That software company, PayScale, claims that when data is adjusted to allow
an apples-to-apples comparison, women make about 98 cents for every dollar
a man makes, although this varies by industry.

The gap might be smaller than previously thought, but is it justified? Pay
equity advocates have had some recent successes in challenging common
practices that may contribute to gaps, such as asking job candidates for their
pay history before formulating a job offer. Specifically, the practice will be
banned in Philadelphia in May. And beginning next year, employers in
Massachusetts will face that restriction.

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 Locked In
The concern is that women are, in effect, locked in to lower pay scales due to
past pay discrimination. Employers are sometimes reluctant to bring in a new
employee at a substantially higher rate of pay than he or she is or was already
making, if the purpose is only to keep new workers on par with current
employees in similar jobs. That's understandable, because paying more than
appears necessary defies financial common sense. But there's more to the
story.

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Given the philosophical diversity of the country, it's unlikely that laws such as
those enacted in Philadelphia and Massachusetts will take the entire country
by storm. But even without such laws, "Employers should start thinking about
the ramifications of stopping previous-pay discussions, whether or not their
locality passes measures banning these inquiries," according to the Society for
Human Resource Management.

Why? For one thing, debate and discussion about this topic is building even in
remote areas of the country. Over time, more female (and also some male)
job hunters may simply decline to reveal their pay history.

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 Response Ready
There's a good chance that, at some time in the future, you'll encounter job
applicants who simply won't reveal their pay history. Suppose you get an
application without pay data, from someone who, otherwise, seems well-
suited to the position. Will you refuse to consider that person? If so, this could
mean missing out on an excellent candidate. Instead, be prepared to continue
assessing the candidate without regard to pay history.

You should already have some kind of system in place that you use to establish
pay ranges for particular jobs, based both on the value of that job to the
organization, and the prevailing pay for positions at your company. This is
important even when you're not hiring, because your current employees need
to have some level of confidence that their pay isn't arbitrarily determined.

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By refusing to consider an applicant who won't reveal his or her pay history,
you could be doing your company a disservice. That is, you could miss out on
hiring the best candidate for the job, and in the process, may even end up
paying more than necessary to another applicant.

If a candidate you are interested in is reluctant to reveal his or her pay history,
ask for a range, or general idea of what the person expects as a starting wage.
If you end up in the same pay ballpark, you can proceed from there. Just make
sure you go to the interview with some pay research under your belt, so you
don't undervalue the job or offer more than you should. Chances are, the
applicant already has a good idea how much a job is worth, and so should you.

Armed with some research, you may be able to overcome concerns about a
perceived "low" pay range by explaining your process for evaluating
performance and the possible pay increases that can result from a strong
performance review.

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 Gender Gap in Your Pay Scale?
Polls taken by PayScale reveal that many workers consider this a hot-button
issue, even if you've never heard it mentioned. That's why PayScale warns, "If
your employees don't think you're doing enough to address gender inequity,
they might already have one foot out the door.

As mentioned earlier, do you pay less to a worker who has returned to a job
after a long absence (typically a woman who took time off to raise children)?
If so, consider whether time on the job improves performance. If not, does it
really make sense to pay her less? You could find yourself accused of pay
inequity, based on gender. The potential ill will is probably not worth the
money saved.

Hiring the right people at the right pay is crucial to your organization's success.
Compensation and recruiting consultants can provide more insights on these
topics if you are unsure about whether you're doing the right thing.

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