Posted December 12, 2021 by Mark Perna
“The war for talent is over and the talent has won.” Mark’s article, “Why True Pay Equity Is About Your Company Culture, Not Just The Money,” published at Forbes.com on December 7, 2021.
The statistics are eye-popping: some 20 million Americans quit their jobs this year. The Great Resignation, as it’s come to be called, is forcing employers to rethink their workplace cultures with an eye on attracting new workers—and keeping the ones they have.
As part of that shift, the topic of pay equity—ensuring that all employees are paid fairly—has become a particularly hot-button issue recently as a potential driver of employee turnover. That’s especially true of women and people of color, who have historically been underpaid relative to their white male counterparts.
“Pay inequity puts you at risk of losing your best employees and the innovation benefits of diversity,” says Frank Møllerop, CEO of Tivian, which helps companies collect data on employee engagement. “Younger generations, especially Millennials and Gen-Z, simply won’t tolerate the inequity. As they make up an increasingly larger portion of the workforce, it will become a crisis for employers.
“The war for talent is over and the talent has won. If your company doesn’t address this issue, they simply won’t come to work for you.”
The gender-based pay gap isn’t anything new, of course. It’s been around for at least 40 years, if not longer. Currently, a United Nations report has found that for every dollar a man takes home, a woman makes 77 cents. “And if you’re a woman of color,” says Møllerop, “the gap is even bigger.”
Møllerop believes that it’s time for corporate America to wake up when it comes to unequal pay. Not only is it morally wrong, it’s also a huge, missed opportunity to build a more diverse and innovative workforce.
“Organizations must deal with the diversity, equity and inclusion issues around culture and unconscious bias,” says Møllerop. “And to do that, you need data on how your employees feel about the organization, what it’s like to work there, what their opportunities are and how they feel valued—or not.”
The first step in crossing the pay equity gap is to create an environment that enables employees from all walks of life to achieve and perform in ways that deserve higher pay.
“Solving pay equity gaps isn’t just about paying women and people of color more,” says Møllerop. “It’s about creating an environment that enables them to earn more.” When career and knowledge progression are a foundational part of the culture, everyone has a chance to level up—and be compensated accordingly.
Møllerop says that companies must first fix the underlying unconscious biases that keep under-represented groups from achieving professional growth and leadership roles. For example, if you want more women in leadership positions where they can earn higher salaries, you need to adopt a culture and leadership style that’s attractive for women.
“Employers need to measure cultural sentiment to determine how their employees feel about their opportunities to apply for promotions, to move around and grow within the organization,” says Møllerop, “and to be included in certain environments like leadership.”
In an ideal world, Møllerop says, companies should be able to post all their employees’ salaries on an internal portal for everyone in the organization to see. “That kind of transparency is an aspiration,” he says, “but I hope we’ll all get there someday because it means we’ve solved the problem.”
Meanwhile, the Internet has helped create more transparency around what people earn—which has exposed some of the pay inequity issues. On the other hand, this can sometimes create unintended consequences like some employees feeling entitled to more pay when they may not deserve it.
“Just because you’re of the same gender, age or ethnicity as someone else in the organization, that doesn’t necessarily merit equal pay,” says Møllerop. “Pay should always be performance driven.”
Employers need to make it clear to every employee how they can progress in their performance and how it will impact their compensation. “Career pathing” is an essential way to help employees understand how to reach their goals and justify getting paid more by tackling opportunities that contribute greater value to the organization.
“You have to look at the results of the individual,” says Møllerop. “Talk candidly about opportunities available for growth and what they need to do to take advantage of those chances to achieve higher pay. Employees can then advocate their case for equal pay because they can back it up with data and proof points.”
Møllerop feels that American companies have been slower than other companies around the world when it comes to offering employees pay equity and flexible work. That’s become a bigger issue given the normalization of remote work, where companies can now tap talent around the globe.
“If companies are no longer bound by geography when it comes to hiring and employment, what does that mean?” asks Møllerop. “You may need to change your perspective very quickly or else you may not remain competitive on the global market.”
Unless they want to confront a deeper talent gap, organizations need to focus on more than just pay equity—they need to create work cultures that are flexible enough to enable growth and equity at different parts of an employee’s lifecycle.
“Employees today are facing a lot of challenges,” says Møllerop. “You may have small kids to take care of, or sick parents or other things you have to or want to do in your life. People shouldn’t be penalized or held back because they have other demands in their lives. That means, wherever the job allows, companies must give employees more fluidity in how they work, from where and at what time.”
As Møllerop says, in the war for talent, talent has won. That means that employers need to embrace a new outlook on key issues like crossing the pay equity gap, building cultures that attract diverse talent and offering flexible work. Otherwise, they risk becoming obsolete and ignored by workers around the world.