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

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