7 Steps Toward Pay Equity – Installment #2 – Data Collection Begins: Pay Scale

Chainsaw carving in Craig, Colorado.

We’re on the topic of developing fair and equitable pay in organizations. For background on the series and the importance of pay transparency, please see Installment 1: Overview and Key Steps.

Examining the current pay scale (sometimes called a salary schedule) is the first in-depth activity for leadership in understanding how employees are paid. If none exists, create one.

Here’s a sample of what we include at Upward Development when building pay scales to document current pay in an organization:

Note: I’m recommending a pay scale by position first, without naming individual employees. This supports more consistent budgeting, pay transparency and equitable compensation practices for organizations.

Establishing pay ranges and grades by position is a more objective and evergreen exercise, because the pay scale applies to an organization regardless of the people occupying each role.

A second phase of analysis might include a by-name pay scale, which would highlight disparities in pay for people holding the same positions. This is a far more complex technical exercise because seniority, expertise, and other issues must be taken into account. Of course, the human aspects of reviewing and adjusting pay are also very personal; it’s best to tread carefully on this ground.

Once the pay scale is complete with current and accurate data, it’s possible to identify:

  • High & low wage points for the organization, as well as in each department and/or functional area
  • Difference (%) between high/low points for the organization and positions within each department
  • Mean (average) wages for positions, functional areas and the entire organization
  • Median (middle) wages “” “”
  • Outliers – highly overpaid or underpaid positions compared to peers in similar jobs
  • Disparities in pay for departments or positions (specialists of one kind paid far less than others, etc)
  • Equity across salary bands
  • Turnover issues related to significantly underpaid positions
  • Lack of depth (or too many positions) in key operational areas
  • Workforce characteristics:
    • Salary vs. hourly positions
    • Part-time vs. full-time staffing
    • Administrative vs. program/direct services positions

Optional Considerations

  • Calculate the average wage for the bottom 50% of compensated employees
  • Calculate the average wage for the top 50%
  • If doing a by-name pay scale:
    • Add a column to identify gender for each person; review and correct any disparities noted.
    • Include additional demographic characteristics, such as Veteran status or race/ethnicity.

Additional Reading

How pay transparency can keep people from quitting – Anne Fisher

All right, we need to talk about nonprofit salaries – Vu Le

In Closing

Check back next week for tips on how to complete a wage comparability study (external data) to go with your pay scale (internal data). Comparison of the two will ultimately lead to a new pay schedule, which outlines the desired wages and pay ranges for each position.

Thanks for reading!

Andi

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