As companies worldwide continue to focus on fairness and transparency in their pay practices, it is critical to understand the evolving methodologies behind pay equity analysis and the importance of robust job architecture. Dr. Brian Levine, Partner and Pay Equity Leader at Merit Analytics Group, has spent over two decades at the forefront of pay equity efforts, working with some of the largest organizations in the world. Brian’s insights have shaped industry standards for pay fairness.
In this interview, in advance of the upcoming LinkedIn Live event, “Advancing Pay Equity through Job Architecture and Analytics”, Brian shares some of the most surprising findings from his career, critical factors companies should consider when interpreting pay equity data, and effective ways to demonstrate transparency and accountability in public reporting.
You’ve worked with a quarter of the Fortune 100 companies on pay equity. What initially drew you to this field, and what has kept you motivated to lead change in this area for over two decades?
In my work as an HR consultant more than two decades ago, analyzing employee data to assess how companies can best drive workforce productivity, inequities were frequently apparent. I often saw differences in pay, performance evaluations, and promotion decisions across gender and race lines, even after accounting for differences between employees in the roles they occupied and their prior workforce experience. These inequities were apparent even for companies that were engaging in regular audits coordinated by their legal function.
I realized that proactive analysis engaging the HR and compensation functions, in addition to legal, could be more systematic, rigorous, and impactful. Since then, I have worked to make such analyses scalable and to support organizations that wanted to be ready to assert their achievements. And, of course, it is rewarding to see that now annual pay equity review and disclosure have become commonplace. I continue to be excited to support those who are working to drive and preserve equity in their workforces.
Throughout your career, you’ve led hundreds of global pay equity studies. What were some of the most interesting or surprising findings that emerged from these studies?
There have been some consistent surprises in pay equity studies. Let me focus on three.
The first is broad: when organizations have robust job architectures and processes in place, adjusted pay gaps from pay equity analyses are common, but small – generally less than 2-3%, even in the absence of any prior pay equity investigations. So they are fixable, with limited, targeted budgets.
Second, while women may have higher performance ratings – they often do – they are also often less well-rewarded on those ratings than men. Pay equity analysis can recommend pay changes that ensure consistency in pay-for-performance norms.
Third, one should be cautious in processing adjustments for whites who appear to be underpaid relative to, say, Asians. I say this because Asians, in such a case, might be stuck at the top of their levels whereas Whites get promoted past them; what seems to be a negative pay gap for Whites might instead be a negative promotion gap for Asians.
With your deep expertise in people analytics, what do you see as the most critical factors for companies to consider when interpreting pay equity data to ensure they’re driving meaningful change?
To drive meaningful change, the analysis needs to be trusted so that managers will act on it. To ensure the analysis is trusted, the analysis needs to be transparent as opposed to black-box, with critical leaders having the opportunity to validate the factors taken into account, and the analysis needs to be carefully communicated to managers, to ensure they understand its purpose and, further, why specific employees on their teams are being recommended for adjustments.
Also critical here is to understand the impact of specific pay adjustment strategies on the pay gaps themselves. In the past, organizations would process adjustments for those most clearly out of line with norms, generally a very narrow set of cases that would not move the needle; now, organizations process a sufficient set of adjustments tested in advance to ensure they are closing gaps uncovered, subject to reasonable budget constraints.
You’ve evolved methodologies over the years to help organizations document progress on pay equity in their public reporting. What are some of the most effective ways companies can demonstrate transparency and accountability in this area?
Companies should first ensure that their analyses are comprehensive – that all employees, in all areas of the business and in all geographies, are subject to the same standard, centralized review. With that in place, sharing at least that regular pay equity analyses are conducted and that issues found are addressed would put a company on par with its talent competitors who have done so. Indeed, employee trust that a company is fair on pay is a key driver of employee engagement. Some have taken the step of sharing the results of their analysis – in terms of cents on the dollar by gender and by race/ethnicity – and I would certainly coach those who have been at this for a few years and have favorable results to do so.
With greater demand for transparency from employees and greater requirements for employers to be transparent, assurance to employees that effort is made regularly to ensure their alignment in their ranges can be critical.
To the last point, I would also emphasize that educating managers on the legitimate drivers of pay (e.g., experience, performance) that are revealed to be most critical from a pay equity analysis can help them in navigating conversations with employees who are asking “why am I positioned where I am in the range?”
Without giving too much away, what are you most excited to discuss at the upcoming LinkedIn Live event, and what do you hope attendees will take away from it?
I am excited to be pairing the importance of (1) structures (e.g., job architecture) and associated processes to limit issues with (2) regular pay equity review to course-correct where things have gone awry. I hope participants come away with a deeper understanding of how critical that pairing is, where there is discretion in pay setting, and an understanding too, therefore, of how critical their own roles as HR and compensation practitioners are to driving equitable outcomes.
I am also excited to hear from the guest panelists about how they have moved in their organizations to most effectively implement such programs and hopeful that that knowledge will help attendees navigate similar situations they are facing.
To hear more from Brian and get your questions answered, join us at the upcoming LinkedIn Live event, “Advancing Pay Equity through Job Architecture and Analytics”, where Brian will dive deeper into these topics alongside a panel of other industry leaders. See you on October 30th!
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