Diversity, (Pay) Equity, and Inclusion

Fair and equitable compensation is a tangible and impactful way to put an organization’s DEI goals into action, according to recent research from Salary.com.

By Maggie Mancini

DEI programs have become a mainstay of HR strategy over the past several years, encouraging diverse perspectives and making efforts to connect employees to their organization’s values. Recent research from Salary.com finds that 76% of employees would consider seeking new employment if they discovered an unfair gender pay gap or lack of credible DEI policy within their company.  

Often, this triggers what the report calls “shift shock,” a phenomenon in which new hires realize that the company they’ve started working for is different than they were led to believe. Lenna Turner, director of DEI at Salary.com, says that transparency is a major factor when it comes to avoiding shift shock.  

“The key to understanding the culture of innovation for HR professionals is understanding the landscape of the talent that you’re seeking,” Turner says. “The generational differences in what concerns are brought into the workplace by Gen Z, Gen X, and older generations is such a mix, so really being transparent about what your culture looks like and connecting potential employees with existing employees can help people really get to know the culture.”  

Turner adds that while connecting new hires to more seasoned employees is important when highlighting the culture of the organization, HR leaders should do additional work on the inside to build tools to help people really understand what they’re going to be doing. 

For example, if an employee goes through the hiring process believing that they will have chances for collaboration, they will be shocked if they end up working in silos. For people who don’t like to work in that way, the lack of transparency can cause difficulties and may lead to employee turnover. HR professionals should ensure they are communicating the processes and procedures inside the organization and how they reflect externally for new hires.  

Though DEI is typically understood through the lens of race representation, gender balance, and support for diverse perspectives in the workplace, the report explains that paying employees equitably is one of the most tangible and impactful means of putting an organization’s DEI goals into action. By making efforts to improve pay equity, leaders show employees that their differences are acknowledged, their contributions are valued, and they are being paid fairly, regardless of factors like race, gender, or ability.  

“When talking about DEI and pay equity, HR leaders should start to look at the practices and policies that impact pay,” Turner says. “Look at the merit process, look at the promotional process, look at how people come into the organization, and who populates the lower-paid jobs in the organization. Are they mostly women? If so, why is that? How is that?” 

Turner explains that it’s important for HR leaders to understand how marginalized people move up in an organization—because when employees move up, there’s an assumption that their pay increases. For employees starting out in a very low-paying job without a lot of professional development to move out of that job or to gain new skills, they may remain in their low-paying job for longer periods of time.  

“That’s part of how pay equity breaks down,” Turner says. “You must look at things like promotions, development opportunities, and then sort out the policies that govern how you move people through the organization and how they get paid. HR leaders should look at the systemic impacts of where a person’s pay starts, how it can grow, and whether that process is done on a fair and equitable basis.”  

A study by McKinsey & Company and The Society for Human Research Management finds that organizations exhibiting gender and ethnic diversity are 15% and 35%, respectively, more likely to outperform less diverse organizations. At the same time, organizations with gender and racial diversity bring in increased revenue, more customers, and higher profits.  

“DEI initiatives play a huge part in developing a culture that’s inclusive, that creates a safe space for belonging, where employees feel valued, and where their diverse perspectives are appreciated and heard,” Turner says. “That breeds innovation, collaboration, and improves engagement all the way around. What I’ve found in talking to employees and through research is that employees want to have that culture, they want to feel that they’re coming into an organization that is working towards inclusivity.”  

While companies can improve their reputation by publicizing their DEI initiatives, leaders must do what they’re promising to do to improve employee engagement and, in turn, boost performance. Further, building pay equity into the company’s DEI policy and diving into the processes and procedures that govern how employees are paid is a tangible way to improve employee engagement, Turner says.  

“Utilizing DEI and pay equity can help companies attract and retain top talent, but it’s important to be transparent,” Turner says. “Be transparent about it within your recruitment programs, showing potential employees that you understand the changing dynamics of the global economy and the workforce and understand the importance of recruiting and managing your talent pool.”  

Intersectionality plays a major role in implementing DEI initiatives because it helps HR leaders to understand the complex nature of discrimination and marginalization that individuals may face based on their race, ethnicity, gender, sexual orientation, religion, socioeconomic status, and ability.  

To understand the concept of intersectionality as it relates to pay equity, Turner provides an example of a woman recruited into a customer service job with low pay. If that woman is a single mother, childcare costs may outpace her income, and these compounding issues may hinder her opportunities for professional development. This, in turn, can keep her from advancing in her career and finding a higher paying job. For women of color, who are often paid less than white women, these issues can be further complicated.  

“These marginalized identities are layered on top of your circumstances, the processes, and the system that you become a part of as you go into the workforce,” Turner says. “And that’s just one example. There are so many things that can be layered upon one person that could impact their pay. And it could be anything from gender, sexual identity, race, or any of those things.”  

HR leaders can conduct regular pay equity studies to find out where these pockets are so leaders can start to improve or assess them and address them on a regular basis to ensure that people who come into the organization are paid fairly.  

“We talk a lot about intersectionality because it’s not just one thing that impacts people sometimes,” Turner says. “Those compounding factors are really piled onto people who already face marginalization and a lot of historical issues that impact the job they have, the money they make, and how they’re socialized or primed to talk about salaries or pay increases.”  

There are a lot of factors that impact employee pay when they enter the workforce and as they advance through their careers, Turner says. Pay equity is key to incorporating the diverse perspectives of marginalized employees and is something tangible that HR leaders can work on to move their DEI strategy forward.