The Plunkett Pay Equity Framework Step 4: Benchmarking External Competitiveness

Today, more workers realize the need for pay equity. In recent years, more groups, people, and companies joined the call for fairness within the workplace. In addition, HR experts believe pay equity at work to be one of the critical issues they face.

For this reason, it is crucial to act now. Doing so not only benefits businesses and workers, but it is the right thing to do. There is a lot at stake through this journey of achieving pay equity in all aspects. But there is still much to explore about the issue of pay equity.

Pay Equity

To put it simply, this refers to equal pay for equal work without counting which demographic a worker belongs to. This does not simply mean that workers must receive equal pay. This idea covers the equal treatment of workers belonging to various groups.

For most companies, this term covers issues involving fair worker’s pay. This issue has been ongoing throughout history. The government created laws to help fight this challenge.

The Fight for Pay Equity Through the Decades

Through the years there have been various laws created to address fairness in the workplace. This includes the battle for pay equity. Here is a lookback from all the years fighting for pay equity.

• 1930s: During this period the government passed The Fair Labor Standard Act. This is the first attempt to achieve pay equity. This law sets a minimum wage for workers, regardless of age and gender.

• 1940s: During World War II, companies welcomed more women in the workplace. There was another attempt to erase the gender pay gap. This was in 1942 through the National War Labor Board. But the government was not able to enforce it due to the end of the war.

• 1950s: During this time, the Congress created more pay equity laws. Sadly, none did not push through.

• 1960s: In 1963, President John F. Kennedy signed the Equal Pay Act. This law forbids firms to pay women and men differently for the same job. In 1964, there was the Civil Rights Act. This law forbids unfair pay depending on race, gender, age, religion, origin, and disability.

• 1970s: 1979 was the creation of the National Committee on Pay Equity. This consists of unions, women’s groups, and experts. They aim to expand pay equity using lobbying and education.

• 1980s: This is when there was a rise in lawsuits and strikes relating to pay equity. During this period, there are companies starting to conduct studies on pay equity. Meanwhile, others are starting to make pay changes.

• 1990s: 1996 was when President Bill Clinton declared the National Pay Inequity Awareness Day. Many know this as the Equal Pay Day. This is to create awareness about the gender pay gap.

• 2000s: Pushing for pay equity through federal laws begins to slow down during this time. As a result, states and localities try to close the gender pay gap. There are now some states with stronger equal pay practices.

A New Definition of Pay Equity

As the fight for pay equity evolves, so should how many understand it. In the past, pay equity refers to having equal pay for equal jobs. It is more of an internal equity analysis practice. But as many experts like Salary.com discover new tools to analyze pay equity, it now has a new definition.

The old definition seems accurate in terms of the law. But this falls short of how workers define it. Workers form a view of pay equity when they compare their pay to that of other firms. In addition, they often do not have the entire knowledge of their total earnings and how companies figure it out.

Pay equity needs the aspects of internal equity analysis and external benchmarking. As a result, these aspects bring in a new definition of pay equity. It refers to equal pay for the same job roles that is internally equal. Moreover, it should be externally competitive and which companies can relay clearly.

The Plunkett Pay Equity Framework

CEO and Co-Founder of Salary.com, Kent Plunkett knows the pressure to act in addressing pay equity. For this reason, he created the Plunkett Pay Equity Framework. He says that the solution to this issue needs to reflect what is happening both inside and outside of a company. There should also be transparency in why and how firms pay their workers.

The framework has six steps. In addition, it uses continuous pay equity analysis. Here are the six steps of the Plunkett Pay Equity Framework.

1. Mandate pay equity.

2. Group comparable jobs.

3. Model internal equity.

4. Benchmark external competitiveness.

5. Communicate transparently.

6. Update continuously.

Step 4: Benchmarking External Competitiveness

To get a wholistic approach in dealing with pay equity, internal equity is not enough. This is what step four focuses on. A company must first conduct analysis and set fair pay within its workforce. After that, they need to compare those pay ranges to the external market.

In this way they will have an idea of how they can attract and keep workers. Experts refer to this process as benchmarking or job matching. It is a critical process which involves matching a company job to the closest benchmark job.

This benchmark job is a type of job post for which pay, and other aspects stay consistent across the industry. Firms use this to make pay comparisons and job evaluations. It is useful to workers and employers.

The fight for pay equity continues. Companies make every effort to achieve pay equity in the workplace. The creation of the Plunkett Pay Equity Framework is one of those efforts to successfully apply fairness within the workplace.