Published 24 November, 2020

Compensation Parity- Is the job done or still work in progress ? (3 Mins Read)

A human mind is at complete peace when there is balance. Be it mental balance or professional. Human beings seek balance in order to achieve their goals. Therefore, it’s no surprise that employees view compensation parity as a matter of self -respect, and also as a medium to maintain balance in their professional lives.

When an employee puts his/her best foot forward to reach organisational goals, he/she expects the company to recognize that and compensate him/her for the same. But when an employee gets less than what he/she deserves (monetary or non- monetary), disappointment surfaces, resulting in lack of dedication to work. Thereby, it can’t be ignored.

In simple words, compensation parity is ensuring that employees in the same job and location, are paid fairly relative to one another, regardless of their gender and ethnicity. Unfortunately, there exists a wide gap between the theoretical and the practical usage of this definition.

As compensation disparity is practiced more than compensation parity, and that’s where the problem begins. No one can deny that “disparity” is ubiquitous, as even the film industry is a victim of it, where female celebrities are still fighting to get their due; and if not more, then at least equal to the male celebrities.

Even though there are many types of disparities, the one which needs immediate attention is Gender Disparity, where women are paid fairly less than their male counterparts, due to reasons which are beyond “reasoning”. According to PayScale, women make $0.81 for every dollar a man makes. The situation gets worse as due to this wage gap, women hold nearly 2/3rd of outstanding debts in the US, thus making them unable to repay loans.

Let’s track down some reasons as to why this gap exists:

  • Less women than men in senior roles- This comes from an assumption that as senior roles require for an employee to give more working hours, men would easily be able to do so as compared to women who also have their homes to look after.Had it been the 20th century, this assumption would have held true, but since it’s the 21st century, it feels no more than a good excuse to fuel gender disparity.Women these days are completely ready to take up a good opportunity, come what may, and all these reasons become invalid when a competent person is ready to do the job, irrespective of gender.
  • Inverse relation between a woman’s wage and motherhood- According to OECD data, the motherhood penalty amounts to about a 7% wage reduction per child. There is also some evidence of a fatherhood premium: a positive relationship between a man’s wage and the number of children he has.The discrimination is evident here, as the same factor benefits one gender and proves to be a disadvantage for the other. Women often choose to move to part-time employment or to step out of a career promotion pathway in order to have more time for motherhood and childcare when their children are young. If they return to work full-time, they are often forced to accept a lower wage compared to the wage they would have earned had they stayed in their original job.

Apart from gender disparity, other disparities which are widespread are that against race, and disability.  In developing countries, there is a large compensation gap between locals, and emigrants. Regardless of the type of disparity, the fact remains that when an employee realises a compensation gap, it directly affects the employee retention negatively. Moreover, the organisation struggles to find new talent because of having a bad reputation of unequal wages. Hence, it becomes a question of the branding of a company. These days, employees want to be a part of inclusive workforce, where they get much more exposure, and opportunities.

In the world of social media, where a negative review spreads like wildfire, it is crucial for companies to indulge in practices which are morally right. It should come as a conscious effort from the employer’s side, rather than adherence to various legal acts.

To avoid disparities, and maintain a healthy working environment, companies can increase the proportion of females in senior roles in the coming years, depending upon their capabilities. The focus should be on reducing the wage gap over time. This can be further achieved through job evaluation methodologies. Remuneration policies and processes should consider in-depth checks and controls to ensure that employees performing equivalent roles are rewarded fairly, regardless of gender and ethnicity. It all comes down to, how morally intact an organisation is, and what example it wants to set for its competitors.



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