Providing fair compensation & benefits
Leveraging our proprietary framework, the Categories of Inclusion, Aleria measures inclusion at organizations by looking at the unique experiences of exclusion of employees. The data we collect tells a powerful story. This post is part of a series where we touch on each of the Categories of Inclusion, sharing the trends we see in the data and how to enact change. Check out our previous posts on recognition and work-life balance.
In some ways, the effect of compensation and benefits on inclusion can seem relatively straightforward. It’s not very surprising that people in general want to feel adequately compensated for the work they do, ensuring financial stability for themselves and their loved ones. Being able to be less stressed about financial well-being means that’s one major thing they’re not thinking about as they come to work each day.
But adequacy is only one component of compensation. Fairness and equity is another. Pay gaps across gender and racial lines are heavily documented. On the whole, white men make more money in a year than women in similar roles. Breaking down the numbers by race here in the U.S., Hispanic and Indigenous women are most negatively impacted. Pay gaps are caused by many things including determining compensation based on salary history, a practice that is fortunately being banned in many places. In fact, one study of an Asian bank found that more than a third of the gender pay gap was due to informal gatherings of men that women are excluded from.
There is also a push for increased salary transparency in job descriptions and within organizations to support reducing the pay gap. But while 67% of organizations in one report say salary transparency is important, over 60% say their managers are not trained to communicate about pay.
On top of compensation, equitable access to relevant benefits is also crucial. Employees want to be able to have access to the benefits that will make a meaningful difference to their lives. These aren’t necessarily the same as things like gym membership perks (though of course for some folks they could be). The point is that companies need to understand what employees need and see where and how they can support them in accessing it.
As one of our nine Categories of Inclusion, our framework for measuring inclusion at organizations, we have collected quite a number of experiences of exclusion related to compensation and benefits. Looking at all of the data from our entire range of client organizations, 30% of participating employees shared at least one experience tied to compensation & benefits. Additionally, 15% of all experiences of exclusion were linked to this category.
The kinds of experiences of exclusion we hear include:
- Lack of clarity around how pay is determined
- Feeling that bonuses and other additional forms of compensation are based on how like-able you are to leadership rather than performance and experience
- Unequal pay-related processes and compensation along identity lines (gender, race/ethnicity, age, etc.)
- Not having equitable access to the benefits and perks across the organization
- Not being compensated for additional tasks you’re asked to take on
- Caregivers experiencing pay cuts after taking parental leave
When looking at the sources of experiences of exclusion that relate to compensation & benefits, we see the following:
Not surprisingly, leadership holds the significant majority here, followed by HR and Direct Managers. Each of these three sources are typically those making compensation-related decisions.
Part of building an inclusive work environment includes ensuring your employees are fairly and adequately compensated while providing them with the benefits that are most relevant to them. Here are a few tips to get started.
Document and distribute clear and transparent compensation policies
Clarity around compensation process & policies reduces feelings around unfairness. We see often that leaders think their processes are fair and equitable but when it isn’t clearly communicated, employees could feel vulnerable to biases taking place behind closed doors. Having documentation that outlines how pay is determined, and ensuring that pay is actually determined that way, allows for better conversations when reports of unfairness come up. Managers should also be trained to talk about these policies and help employees understand how their pay is determined.
Conduct a pay equity analysis that looks at the whole picture
One’s compensation is more than just what’s on your pay stub. Instead, look beyond base pay to additional forms of compensation. Base pay only tell some of the story. Consider bonuses and awards, as well as non-financial factors like project assignments, promotion rates and more. This article is a great starting point for those looking to run a pay equity analysis.
Understand what your employees’ biggest financial stressors are
Consider adding questions to employee surveys and reviews to understand what their biggest financial stressors are. In addition to demonstrating that the organization cares about alleviating these stressors where possible, having them self-identify what they need will provide valuable information as you figure out what to offer in terms of benefits and other non-financial compensation. As we see time and again, there is often a significant discrepancy in what leadership thinks employees want and what employees are actually looking for. Create a process through which you can have them tell you where they need more support in order to happy and more successful at work.
Provide education and awareness around benefits
It is important that employees are aware of all their options when it comes to benefits packages. Having supporting documentation and HR personnel trained in discussing options with them is helpful to supporting them in making the best informed decisions for themselves. These conversations can also provide further insight into what employees are looking for and what their pain points are.
Compensation & benefits is perhaps one of the most tangible aspects of inclusion and one that plays a vital role in an employee’s sense of belonging and happiness at work. Leaders should take care to review their policies and procedures to promote fairness and a supportive environment for their team.
Wondering what your team members may be feeling around compensation & benefits? Get in touch to learn about Aleria’s Inclusion Assessments.
