The secret reason you got that raise

THYE JIN KANG/DREAMSTIME look under the hood, the data is illuminating.

When a major insurance company recently began its pay equity analysis, leaders wanted to account for only one pay policy: performance rating. But as they looked at their data using the right tools, they realized performance ratings were not explaining variation in compensation much at all.

This finding led the team to think differently about pay policies and apply a much more nuanced approach. Now, they are using nine policies to determine how employees get paid in a much more consistent and fair way.

Another company that held itself out as a pay-for-performance organization found that it was anything but. Once their team examined pay data using the right tools, they realized their performance ratings system favored men.

Across the company, performance scores had little relationship to determining pay. And in one group, they found employees were being paid for higher performance ratings.

By seeing the actual impact of their policies on compensation, they were able to address the root causes that were creating unfairness and focus on the factors that truly influenced pay. Again, the key to transformative change is having the right tools in place.

As more companies turn to software that enables them to meaningfully, consistently and dynamically evaluate pay policies, leaders are finally gaining a pulse on how decisions about pay impact fairness in the workplace. It’s no longer acceptable for employers to be in the dark when it comes to whether pay policies are working as designed in today’s culture of workplace transparency.

By using the right technology, companies can finally hold a mirror up to their compensation strategies so both employees and employers can be confident that policies are driving valid differences in pay and incentivizing intended behaviors and outcomes, and are not biased or contributing to inequity in organizations.