Gender pay equity has become a big point of contention at many companies. Not only have politicians and other public figures spoken out against the gender pay gap, but there has also been a rising tide of high profile lawsuits targeting major employers, most notably in the U.S., with all the bad publicity and financial liability they entail.
In response, many firms have hired external pay consultants and law firms to identify whether they may have a problem with the pay gap from either an HR or legal perspective and to offer possible remedies. But in our view, the most common approaches for identifying a pay gap and resolving it are full of pitfalls for the unwary. That’s because it’s a tall order: you have to calculate the gap the right way and figure out how to fix it without ballooning your wage bill, all while truly helping underpaid women, maintaining your incentive structure, and avoiding the creation of new legal liabilities.