This CompDoctorTM column is updated from an earlier version published in 2018.
Question: Given the ongoing activity at the state and federal level focusing on gender pay equity, our state legislature is considering passing a law requiring gender pay equity. While this is not a new issue, the activity in our state indicates that this is likely to pass this year. We are trying to understand what this means and what we need to do internally in the event that this measure passes. Can you help us determine what we need to do now so that we are prepared if or when it happens?
CompDoctor: An excellent question; but remember the adage—you can lead a horse to water but you can’t make it drink? Facing a requirement to deal with an issue and having the resources and commitment to deal with the issue may be two different things.
First, we must define gender equity, like any other form of pay equity. As a former US president once said and we have quoted before: “It depends on what the meaning of ‘is’ is.”
Does gender equity mean that if you add up the compensation paid to all men who work for your organization and then divide it by the number of men to get an average rate of pay for men—that the average for women should be the same? Or, does it mean that men and women in the same job classification should be paid the same? Or, does it mean that women should be paid the same even if they are doing different jobs? As you can imagine, one can come up with three different answers depending on what the question actually is. So, to be prepared for any eventuality as to the definition, we suggest that you consider the following six factors to support overall organizational wellbeing:
1. Good job descriptions
Fundamental to any equity study, be it gender, race or any other criteria, are good job descriptions. Since the early 1980s, our team has conducted hundreds of gender equity studies for public entities ranging from cities and counties to state governments. The job classification system is a common elements in every study: Do you have a narrowly focused job classification system? Or, have you moved to a broader system that focuses more on the type and level of work, rather than the individual tasks that may be assigned to a specific employee? Are the job descriptions current?
Job descriptions must be up-to-date and contain the basic elements of good job descriptions, including:
- A summary statement about the type and level of work
- Distinguishing characteristics between the class and those above, below and adjacent to it
- The essential duties of the class in compliance with the requirements of the American’s with Disabilities Act
- Minimum qualifications that also are consistent with legal requirements. Otherwise, you will have difficulties defending issues that ultimately arise relative to internal equity. We have found that agencies using a broader system have fewer issues when it comes to determining whether positions are performing comparable work.
2. A gender-neutral job evaluation system
Once you have addressed your job classification structure and your job descriptions are in order, you can compare jobs for purposes of assessing internal equity. There are different tools you can use to evaluate jobs. For those who have been in this business for many years, we grew up using traditional point-factor job evaluation systems. However, today there are seven basic quantitative and non-quantitative tools available.
The Federal Equal Employment Opportunity Commission (EEOC) has opined over the years that the non-quantifiable systems are not going to provide employers with a defensible basis should the employer ever be challenged relative to pay equity, regardless of the criteria. That leaves us with three quantifiable methods such as factor-comparison, point-factor and other tools such as Gallagher’s Decision Band Method® for job evaluation.
For example, traditional point systems require a high degree of specificity in the job descriptions and may be more applicable in narrow job classification systems. You can use the Decision Band Method reliably, however, with either broad or narrow job classification structures.
Although public sector employers have used the Decision Band Method to comply with pay equity laws for more than 30 years, it is not clear that other job evaluation methods can claim gender neutrality. Selection and wording of the job evaluation criteria or the weighting of the criteria must be tested for gender neutrality in order to pass the scrutiny of regulators. Ultimately, employers should select a specific tool based on a variety of elements, including their ability to maintain the system.
3. Pay data that is not influenced by gender
Obviously, since the issue is whether or not you are paying males and females equitably, you will need data demonstrating what the various jobs are worth. Unless your Legislature adopts a law similar to the one adopted by the State of Minnesota in 1984 that simply says that female dominated jobs need to brought up to the pay level of male dominated jobs, which is entirely an internal equity assessment, you will need to know what your organization’s various jobs are paid in the market. You can either conduct your own survey or you can contract with an outside firm to do that for you.
You need to be careful here as well, since you may face the argument that if you select the wrong benchmark jobs, you simply duplicate existing market bias. Since many jobs tend to attract one gender over another, the pay that you survey may reflect the very same condition that you are trying to eliminate.
4. Blending internal equity with market parity
Assuming you have established a pay policy for your agency, you can then determine whether the overall pay structure is tied to market rates, internal equity, or a blend of the two. If you agree that the market is already biased or you cannot identify jobs that reflect gender balance, then you likely will base most of your conclusions on internal equity—not market data.
Some pay equity laws ignore market rates altogether, basing their conclusions on whether or not your pay practices are gender neutral. The market may be important, but the argument is that pay equity is primarily an internal equity question. You might want to revisit the need to assess the market if your pay equity law says little about the market.
5. Developing a comparison between male jobs and female jobs
Once you have the basic data, you will then want to run the appropriate analysis. If you have jobs placed into grades based on your internal equity assessment, an easy analysis averages the pay of females and males in each pay grade. If you find a difference, then you might need to go further and determine whether or not the pay difference is related to gender neutral conditions such as seniority, performance or qualifications. This type of analysis can become very involved and may require a higher order of statistical analysis.
We have seen some analyses that basically develop a line of “best fit” between jobs occupied by males and those occupied by females. Then, if there is a difference between these two lines, the solution is to bring the female line up to the male line, assuming that compensation for the female line falls below the male line.
There are more refined analyses available, but the upshot is that you need to compare jobs of similar internal equity with what the organization is paying. Ideally, you will find no difference between what females and males are paid for similarly valued jobs.
6. Identifying the costs
Finally, based on the identified differences (assuming that the males are paid more than females in similarly valued positions), you can calculate what it would cost to bring female pay up to that of the males. If the females are paid more than similarly valued male jobs, there is no issue to resolve, at least with regard to pay equity. You may want to make other adjustments, however, according to your organization’s pay philosophy.
Although we have outlined six basic steps, there really is a lot more to gender equity assessments, just as there would be if you were dealing with racial differences. However, we hope you get the drift that this is not something you can just sit down and do in your spare time. You really do need to understand all the ramifications if you are to assess gender equity adequately and fairly to help your organization to face the future with confidence.