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How technology can help identify pay inequity

Various technologies and tools, including job evaluation software and compensation planning applications, may help companies identify pay inequity. Learn how.

Pay equity has received new scrutiny over the last few years as many companies seek to improve their diversity and inclusion efforts. Some tools can potentially help compensation specialists and HR leaders examine their organization's pay structures and make improvements.

Technology alone is not the full solution to organizational pay inequity and should go hand in hand with other company DEI efforts. In addition, compensation specialists and HR leaders should consider that system configuration issues, lack of time to maintain the data and a lack of integration between different tools can help create inequities over time.

The following tools and applications can help HR leaders identify pay inequity within their organization.

HR system

An HR system can provide many advantages for HR leaders trying to identify pay inequity. HR systems track all employee data, including diversity and inclusion data, compensation and job progression, in one location. Many HR systems include reporting options that could make it easier to file pay equity data with the government.

Depending on the system, some tools below, such as compensation planning applications or modules, may already be part of a company's HR software.

Reporting

An HR team can use basic reporting tools to produce a spreadsheet of employee data, then analyze pay equity. Doing so is a good early step in this process.

Spreadsheets

Spreadsheets aren't a high-tech pay inequity tool, but many organizations use them for this because they're widely available and able to display information from multiple sources. A detailed analysis may require advanced spreadsheet skills. Compensation analysts and HR leaders should consider processes for ensuring version control and how to limit spreadsheet access.

Analytics and dashboards

Users can set up various analytics and dashboards to identify pay inequity issues, potentially adding signals like green and red font or up and down arrows to indicate positive data and data that needs examination. This shorthand makes problems easy to identify, potentially saving HR team members' time.

Salary surveys

Many vendors sell salary survey data, and some vendors may integrate the data into their HR system. This potentially simplifies the process, since users don't need to leave the HR system to conduct a comparison of their salary data and other organizations' information.

Users should ensure they're comparing similar jobs and comparing data for the correct region, then comparing employees within the company to ensure internal equity.

Job evaluation software

Creating a compensation structure and using job evaluation software to do so can help ensure organizational equity. Compensation structures define the salary levels used within a company, and the structure creators can identify salary range, bonus eligibility, options or shares awarded, and benefits, among other metrics. If a user can integrate the compensation structure into the company HR applications, such as the applicant tracking system and the core HR module, then the user can reference the data in real time rather than exporting it and evaluating the compensation data using spreadsheets.

Using job evaluation software to evaluate each job against compensable factors helps make a compensation plan defensible. The evaluation software awards points to each job based on defined criteria.

Compensation planning applications and modules

Software that facilitates compensation planning can provide many benefits to HR leaders trying to identify pay inequity. Users can often integrate job evaluation data, a compensation structure and other data with the application or module to get a holistic and detailed view of the organization's current pay information. They can also control viewing permissions.

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