What is Pay Parity in HR?

Pay Parity in Human Resources is the practice of ensuring equal pay for the same job within an organisation. It means characteristic such as gender, race, sexuality, religion, and disability will not impact an employee’s access to equitable compensation.

Why Pay parity Matters in HR

Pay Parity plays a crucial role in any inclusive workplace. It supports:

• Employee satisfaction and retention, particularly of talented employees from underrepresented backgrounds
• Legal adherence and a positive employer brand
• Closes the historical pay gap that has affected groups such as women and people of colour
• Supports ESG, by exemplifying social responsibility

By putting in place best practices to support Pay Parity, HR teams can foster ethical business practices and create a thriving workforce.

How Pay Parity Works

1. Carry Out a Pay Gap Analysis: Create a report which compares the salaries of people in similar or identical roles, alongside their demographic backgrounds to identify areas where change is needed.
2. Create and Update Pay Policies: HR must review recruitment practices, performance review processes, and pay policies, to identify areas for correction with the results of the report in mind.
3. Address Unconscious Bias: Provide high-quality, evidence-backed training to staff, especially line managers and leadership, to reduce the presence of bias.
4. Track Results and Implement Further Improvements: Regularly monitor the results of these efforts and be prepared to continue improvements where necessary.

These steps allow HR to take a data-driven approach to pay parity, so that changes in business policy and practice can be targeted and deliver real change.

Best Practices For HR Teams

To support a culture of pay parity, HR should:

• Introduce other businesses practices that supports a diverse workforce, such as flexible working arrangements, apprenticeships, and mentorship opportunities
• Know your legislation – for example, the UK government mandates that large companies publicly report their gender pay gap to promote transparency
• Utilise an HR system that makes data accessible for customised, detailed reporting on employee compensation

A holistic approach to pay parity and its related policies will empower an interconnected strategy, where each practice supports the others.

How XCD Supports Pay Parity

XCD’s HR Reporting & Analytics provides HR teams with data visibility and custom reports to analyse demographics and pay across their organisation. Combined with the wider tools in XCD’s All-in-One HR & Payroll Software, people teams can support pay parity business cases to leadership, evidence their impact at the organisation, and provide an excellent workplace culture that retains diverse talent.