Regardless of how we relate to pay equity analysis, there are many arguments for conducting them: Strengthening gender equality efforts is one, as it is a legal requirement that will soon be intensified by new EU legislation. But how do we ensure that the work creates real value to the organization

Salary Transparency and New EU Directives

Equal pay for equal work has been a statutory right in Sweden for over 60 years. Since January 2017, all employers in Sweden are required to continuously both map and analyze the wage differences within the organization regarding gender. If the employer has more than ten employees, the work must also be documented.

The purpose of pay equity analysis is to ensure that the organization’s salaries are gender equal. The requirements are also intensified in the European Union the coming years with the introduction of the so-called pay transparency directive. This means clearer transparency and measures concerning fair wage setting, tougher requirements, and burden of proof for the employer, and including the rights of non-binary individuals.

The goal of the requirement for pay equity analysis and the new EU directive is the same; equal pay for equal or equivalent work, regardless of gender. And once and for all, to close the wage gap between women and men, which still lingers at an average of 13% – somewhat lower in Sweden. Unfortunately, this figure has not decreased significantly over the past ten years.

Check-the-box or Strategic Business Development?

So, what purpose does pay equity analysis serve if the wage gap still exists? In many organizations, unfortunately, it largely comes down to just checking off the legal requirement. This often means mapping and analyzing wage differences between genders, where each member of the management team argues and defends “their employees”. Perhaps reactively addressing any unfair differences. Or worst-case scenario, finding loopholes to defend them…

Organizations that instead work to create value with the pay equity analysis, use them to make strategic decisions. These decisions provide directions on how to reward desired performance. With this approach, structured dialogues can be created around expectations for assignments, efforts, responsibilities, and shared development forward. And ultimately, results on the bottom line!

Untapped Potential

There is enormous untapped potential in the work of pay equity analysis, we believe. As a management team, taking the opportunity to create consensus on what defines good performance, what expectations and demands you have for specific roles, and how much you are willing to invest in different roles and areas is obvious.

But it is also an excellent opportunity to establish how you, as an employer, ensure strategic competence supply, where the development of roles, demands for new roles and competencies are advancing rapidly. Do you have consensus on how you want to prioritize the work of developing your employees internally vs. constantly struggling to find “new talents” outside your own organization? How do you ensure that you have a learning organization that is equipped for the constant competence development required?

Support for the Business Strategy

Harnessing the power of illuminating the structural choices we make to reward certain roles and individuals in certain ways should be one of the most fundamental business strategies. Just as much as agreeing on why we have a certain pricing strategy towards our customers.

By consciously working strategically and systematically with these topics, you as an employer and organization ensure both your attractiveness and competitiveness going forward.

If you chose to see pay equity analysis as an essential part of your business development, this will provide you with the compass both for how to ensure sustainable performance and results, both today and tomorrow!

Are you interested in learning more about how we at Doings work with strategic salary setting and competence supply, do not hesitate to contact us.