The Value Proposition of Work: SHRM’s View on Compensation Equity


Today is Equal Pay Day, and SHRM has an important new public policy statement on compensation equity, the result of months of work by HR professionals led by SHRM.

There is a value proposition to work: Job candidates want to be hired at a great workplace, and employers want to hire great job candidates. Each wants to understand the benefits provided by the other. Compensation, of course, is a big part of this value proposition for both.

In our statement, we address the value proposition of work, beginning with the most basic truth: Pay decisions should be based on bona fide business factors and not on non-job-related characteristics.

Still, we know that instances of pay discrimination continue to happen. So, how do we address this reality?

Pay Equitably: Every organization expresses how it values its jobs by setting pay for positions. Some try to lead their competitors in compensation across the board, while others have a different philosophy.

How jobs are valued is also affected by the job market and skills sought. Likewise, the salary offered to a candidate is affected by what the candidate brings to the table — relevant experience, hard-to-find skills or specialized certifications.

Employers should be able to consider bona fide business factors such as education, certifications, relevant experience, skills, seniority and geographic location in making pay decisions.

What employers can’t do is pay people differently because of their sex, race, national origin or any other protected classification. This is prohibited by federal law, and it also makes no business sense.

Substitute Salary History with Salary Expectations: Some advocates have focused on prohibiting employers from asking candidates about their pay history. Although SHRM agrees that salary history should not be a factor in setting pay, we do believe discussing and understanding a candidate’s pay expectations are important. Employers should expect and welcome candidates’ opinions about their pay.

Encourage Transparency: SHRM encourages employers to make it clear that candidates can discuss pay during the interview and employees can discuss it in the workplace. Organizations should also share information with applicants and employees about how pay decisions are made.

Enlist Schools and Colleges: To best prepare job candidates—particularly those new to the workforce—schools and universities should educate students about how to negotiate pay, perhaps as part of an existing financial literacy class. Candidates should do their own research before an interview so they are prepared to make their salary case.

Audit Pay Practices: Regular pay audits are a good way for employers to maintain pay equity, but some may fear lawsuits from employees who discover they have been underpaid. Fortunately, several states are providing employers with a safe harbor from litigation arising from a pay audit. This frees employers to make pay corrections.

Adopt Workplace Flexibility: We encourage employers to adopt flexible workplace policies to the extent it makes sense for their operational needs. Flexibility, as a strategic business tool, can help employees and employers when designed and administered appropriately.

Look Beyond Employers: Resolving issues of pay inequity is not the employer’s job alone. As a society, we must also make improvements to our educational institutions and our cultural expectations. We must increase diversity in high-paying fields like engineering, science, law and technology. And we must all ask ourselves how to ensure that employees are able to bring their best selves to work and build meaningful and productive careers.

This Equal Pay Day and every day, SHRM vigorously supports equal pay for equal work. I encourage you to take a look at SHRM’s new pay equity principles in more detail as HR leads this critical conversation about pay and the value proposition of work.


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