I reviewed HR.com's State of Pay Equity Report today and found the findings interesting. For instance, what factors are considered for pay decisions when making hiring offers?
1 – the compensation of others holding the same job in the organization
2 – years of relevant experience
3 – the compensation of others holding comparable jobs in the organization
4 – market compensation studies for benchmarking purposes
5 – degrees and/or relevant certifications
6 – location of applicant or role
7 – interviewees’ past salary history (in locations where this is permitted by law)
8 – tier of universities attended
What is missing from this list?
For those of you with employers that have a pay-for-performance focus, it will be obvious.
Performance is missing. Or in this case the anticipated or potential performance of the candidate is missing from the list above.
Contrast this list with the six justifications that employees can use to warrant pay differences per the Colorado Equal Pay for Equal Work Act.
Together these six justifications must account for 100% of pay differentials: (1) seniority, (2) merit (performance), (3) quantity or quality of production, (4) geographic location where the work is performed, (5) education, training, or experience to the extent that they are reasonably related to the work; or (6) travel if it is a regular and necessary condition of the work performed.
When I am working with high performing employees to help them negotiate their job offers or get promoted with a significant pay increase, we focus a lot of our time developing their value or performance stories. What value did they deliver within the context of what the employer cares about?
What is the employer’s biggest goal over the next year? What are the obstacles to reaching that goal?
Employees need to focus on what they can control in the text above.
Employers only focus on a few things when they make pay decisions.
Employers that are hesitant to embrace pay transparency are doing so out of fear. Fear that something will become visible to employees or other stakeholders if they are open about their pay decision making processes.
Employers: Do you want to express your fears? Of course not, but it’s better to address them now than wait for your competitors to build their reputation for being a better employer through transparency.
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