Is It Time to Pay the Piper?

This is an interesting old English expression. In today’s terms it refers to the ultimate cost of poor or self-indulgent behaviour. It seems employers around the globe have been demonstrating very poor behaviour when it comes to male and female compensation practices.

Where the pay equity issue is concerned, perhaps it is time for organizations to step up and pay the piper by way of addressing and absorbing the cost of the wage gap between men and women. Indeed, this seems to be a trend that is unfolding worldwide in various developed countries.

MacLean’s magazine released two versions of its cover in February; one for men, with a price of $8.91, and another for women, with a price of $6.99. A clever way to highlight the fact that in Canada men make 26% more in full-time wages than women.

This is a global issue. Let’s review some of the concerns around pay equity in other parts of the world:

Tesco, a UK grocery store chain is facing a 4 billion Euro pay equity law suit

The BBC is being accused of fostering a gender pay gap between its male and female reporters

Icelandic companies must now prove they are paying men and women equally, and get government certification

According to Stats Canada, Canadian working women make $0.74 cents for every dollar a man makes

The gender pay gap is a systemic issue in organizations, but that is no longer acceptable in most countries. It is time for all organizations to take an in-depth look at their compensation practices to see if there is a gender pay gap, and to assign resources to correct it.

It is high time for organizations to pay the piper, and to close the gender wage gap. The only way for them to do this is to implement and maintain a comprehensive and fair job evaluation process.

Discussion Questions:

  1. You have been asked by your VP of HR to research the job evaluation process and what it entails. Once your research is complete, you are to produce a 5-minute presentation for the board of directors focusing on the process necessary to complete a formal organizational job evaluation.

Visit the HR Council of Canada as a starting point for your research.

Wage Gap Woes

The gender wage gap issue continues to receive much attention. On the one hand, the focus on the inequities of pay differences between male and female workers is a good thing. On the other hand, the fact that the pay gap divide continues to be an issue is exceptionally frustrating.

The differences in wages between male and female jobs, or male and female employees, is not a recent phenomenon. In Ontario, gender-based wage parity is legislated in several statutes, such as the Pay Equity Act and the Employment Standards Act. The latter, in Ontario, speaks to the requirement of equal pay for equal work. This means that a male person and a female person doing substantially the same job must be paid at the same rate for that job. Recent amendments to the Employment Standards Act (under Bill 148) identify that the words ‘substantially the same’ do not mean identical. The jobs can be similar, based on skill, effort, responsibility, and working conditions.

The Pay Equity Act of Ontario speaks directly to the issue of the value of jobs based on a gender-neutral analysis of all jobs in an organization, based on skill, effort, responsibility, and working conditions. This piece of legislation focuses on the value of jobs within an organization in order to address the inequality of employees in ‘traditionally’ male job classes being paid more than those in ‘traditionally’ female job classes.

None of this is new! The Pay Equity Act has been in place since the late 1980’s. The Employment Standards Act language referring to equal pay for equal work (prior to Bill 148) has been in place for decades as well.

Why are we still talking about this?

Apparently, not much has changed.

A recent headline, as reported by the CBC, provides an interesting view of the impact of budget-based decision-making on gender differences. The article explores a Swedish budgeting decision to clear snow-covered streets for pedestrians before clearing roads because there are more females than males who walk. The connections to wage gap parity may not be clear from the outset, but the article does explore how the Swedish model can be applied to the Canadian federal budget allocation process, based on the impact budget decisions have on female and male citizens.

Click here to read the article.

From this article we see that Canada holds a high ranking on the gender pay gap differentials. Again, this provides us with a clear indicator that the legislative approaches that are currently in place to address gender pay imbalances continue to be necessary and relevant. However, these approaches would benefit from some additional support and changes in decision-making perspectives.

Perhaps, as noted in the article, it is time to include a different approach that focuses on the impact of decisions made when preparing budgets and compensation plans.

What would happen if organizations were able to apply an impact analysis, based on gender, aligned with principles of pay equity and equal pay?

Maybe, just maybe, something might change.

 

Discussion Questions:

  1. As a Human Resources practitioner, how would you go about assessing the value of jobs using the principles of job analysis, in your current place of work?
  2. As an employee, what evidence is there to support wage parity or disparity in your current place of work?
  3. Provide an analysis that explores the pros and cons of using a decision-making process that includes gender impact, when establishing organizational budgets and/or compensation plans.

$49,000 vs. $7.8 million

Mind the gap!

Concept image for greedy corporate business people. CEO is eating a burger stuffed with currency. He is at his desk in his office, wearing a black suit and tie.
Ptstock/Shutterstock

HR has to start considering the gap: the wage disparity gap, that is. What should HR do about income disparity in organizations?

These numbers represent the state of wage disparity in Canada: the average Canadian worker earns $49,000 per year and the average salary for a CEO in Canada is $7.8 million. A CEO earns 159 times the wage of the average worker, but it is much worse in the United States where the average CEO’s salary is over 300 times that of the average worker.

Click here to watch a short video from the Huffington Post on this issue.

The issue of excessive executive pay is at the heart of an organization compensation management system and may be causing organizational and social problems. According to the Organization for Economic Cooperation and Development (OECD), “Income inequality in OECD countries is at its highest level for the past half century.” And, “The average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago.”

Click here to see the OECD report.

Prime Minister Justine Trudeau believes that it is this income inequality that is a leading factor in the political populism that is spreading throughout the world. It is a complicated global issue that has many social, economic and political causes, but one must recognize that income inequality is a factor.

Some politicians such as UK Labour leader Jeremy Corbyn believes the government should address this issue of excessive executive pay and “suggested a wage cap which would prevent people from earning “ridiculous” amounts.”

Click here to read the HRM CANADA article.

In the United States, soon all publicly traded companies will have to disclose worker to CEO pay ratios. Currently, regulations in Canada do not require this disclosure. Should Canada follow the United States and make CEO-worker wage ratios public information? How would this affect an organization’s compensation system? It is definitely something HR needs to think about.

Discussion Questions

  1. Discuss the benefits and the negatives with forced disclosure of CEO-worker pay ratios.
  2. Research to determine if there are any benefits for an organization’s compensation system to be disclosed to all workers in the organizations?