By HR Brew Staff
less than 3 min read
Definition:
A pay equity audit is a compensation assessment that analyzes salaries, bonuses, and benefits in the context of workforce demographic data in an effort to ensure employees are receiving equal pay for work of equal value.
What is involved in a pay equity audit?
In order to conduct a pay equity audit, HR professionals should first develop a job classification system that categorizes roles according to their required skills and responsibilities, and assigns them pay scales. From there, they can collect and compare compensation and workforce demographic data to identify and rectify pay disparities based on protected characteristics such as age, gender, and race.
What are the benefits of a pay equity audit?
Both employees and employers stand to benefit from a pay equity audit. Employees who are paid fairly are more likely to trust their employer, and employees who trust their employer are more likely to be engaged and productive. This trust may also help strengthen their employer’s reputation, resulting in improved recruitment and retention rates. A pay equity audit can also help ensure compliance with pay equity laws and other legal requirements.
What are the challenges associated with a pay equity audit?
Employers may experience challenges conducting a pay equity audit if they do not have comprehensive job classification systems or compensation and workforce demographic data, or if they have a global workforce, as pay equity laws and other legal requirements vary from country to country. Those that identify pay disparities in their organizations may also encounter challenges in their efforts to resolve them.
Can you put pay equity audit into context?
“[Heather Bussing, who literally co-wrote the book on pay equity] told HR Brew that it’s more important now than ever for companies to figure out how pay equity factors into their decision-making through an audit, especially as the compliance winds shift towards more reporting and more accountability,” HR Brew reported in November 2024.
