The Affirmity-sponsored HR.com white paper “The Future of Pay Equity and Transparency 2025” recently provided a look at how organizations are responding to increasing employee and lawmaker scrutiny on key pay topics. In this article, we’ve pulled out five interesting findings from the report, and taken a look at some recommended best practices for ensuring your organization uses pay analysis to remain equitable.
1) Two-Thirds of Respondents Believe Pay Equity Will Improve in Their Organization Over the Next Two Years
One of the more positive insights from the report is that only 9% of its respondents do not see pay equity improving in their organization in the near future. In fact, though an encouraging two-thirds of respondents expect their organization to become at least somewhat more equitable over the next two years, another 25% already believe their organization to be equitable.
When asked what the main influence on their organization’s pay equity and transparency practices will be, 60% cited “changing workforce expectations” and 58% cited “legislation and regulation”.
Recommendations
Your organization may already value pay equity and be poised to either improve its situation in the near future, or simply continue the great work it’s already doing. However, if you’re in an organization that doesn’t prioritize pay equity, or an organization that could be doing even more than it already is, it may be valuable to examine why that is.
- Does your organization have measurable, time-bound goals to ensure compensation and compensation practices are in alignment with the Equal Pay Act, Title VII of the Civil Rights Act, and other state and local laws it may be subject to?
- Are these goals communicated in a way that will make the wider organization take notice?
- Does your organization designate senior leaders to champion such pay equity initiatives and ensure accountability?
- Do these leaders have access to the expertise needed to facilitate pay equity programs while minimizing risk and ensuring compliance with relevant legal obligations?
All of these measures can improve pay equity’s standing on the organizational agenda and send signals that the organization is serious about pay equity goals.
GET A GLOBAL PERSPECTIVE ON PAY EQUITY | ‘Pay Equity Reporting Around the World [February 2025]’
2) 38% of Organizations Didn’t Conduct a Pay Equity Analysis in 2024
The report asked respondents whether their organization had conducted a pay equity analysis in the past 12 months, and had them indicate whether this analysis was conducted with internal or external expertise. 42% had conducted an analysis with an internal team, 3% had relied entirely on external experts, and 18% had used both. However, over a third said they hadn’t conducted an analysis at all during this period.
The report strongly suggests that conducting a pay analysis annually is a marker of a more equitable organization. Nine in 10 of those organizations deemed advanced or expert practitioners of equitable pay (using the report’s maturity model) had conducted a pay equity analysis over the past 12 months.
Recommendations
While it is technically possible to pay equitably without conducting a pay equity analysis, this becomes less and less likely as increased discretionary components and more loosely defined determinants of pay become part of the systems that determine pay levels. For almost all organizations it’s critical to regularly analyze compensation data to uncover pay disparities.
From these analyses, the drivers of disparities (i.e. potentially underpaid employees) should be identified and compared against either internal standards that are as well defined as possible or external benchmarks when making adjustments. To tackle this analysis internally, you will need a cross-functional team with HR, finance, and legal experts. However, leveraging compensation management technology and external expertise can do much to reduce burdens and increase accuracy.
3) Half of the Organizations Surveyed Make Chief HR Officers or HR Departments Responsible for Pay Equity
In the majority of organizations the HR department is tasked with ensuring pay equity and related issues, however, the specific individual or part of the HR team involved does vary. Most commonly, a Chief HR Officer (CHRO) or the HR department as a whole are considered primarily responsible (taking a 29% share of responses each). However, a specific team or person with the HR department may also be responsible in 14% of cases.
The CEO (8%) or a total rewards/compensation/payroll department (16%) may also be responsible. The report observes that the latter is a lot more common in larger organizations—presumably because budget is more likely to be available for specialized teams of this type.
Recommendations
The best place to assign pay equity responsibility varies from organization to organization—but, in general, it’s critical to ensure that it resides with an empowered and well-resourced team or individual. Assigning it to (or within) the HR department may not always be the best idea: it’s easier to make pay equity a strategic priority when the responsibility is given to HR leadership or another senior leader. Having a dedicated compensation team can also help ensure pay equity is appropriately prioritized, though the department will need advocates at executive level in order to drive sustainable changes.
EXAMINE THE CAUSES OF PAY INEQUALITY | ‘The 4 Fundamental Causes of Gender Pay Inequality’
4) 80% of Organizations Include Salary Ranges in at Least Some of Their Job Postings
Pay transparency has been a hot topic for some time now, with a growing number of U.S. states requiring employers to disclose salary ranges in job listings. Forty percent of survey respondents say that their organizations do so for all job postings, whereas 17% say they disclose only where legally compelled to do so. A further 23% provide salary ranges for some but not all job postings they aren’t already legally required to disclose.
Smaller organizations are more likely to include salary ranges for all postings (51%) than large- (39%) and mid-size (30%) organizations. It stands to reason that smaller organizations—which likely post fewer jobs—find it easier to include this kind of information (perhaps larger organizations also find it easier than mid-size organizations to put resources towards this issue).
Furthermore, salary range disclosure is strongly associated with more equitable organizations: three-fifths of more equitable organizations include salary ranges in all job posts, and they’re twice as likely to do so than less equitable organizations.
Recommendations
Managers need the right tools and the right training in order to understand your organization’s pay structures and how salary decisions are arrived at. This ensures consistency in application and messaging. In the current environment it is more critical than ever for organizations to stay informed about the latest legal requirements regarding pay equity and transparency, and to understand the nuances of the law in each state they operate in.
LEARN MORE ABOUT STATE-LEVEL PAY TRANSPARENCY | ‘Your Guide to State-Level Pay Transparency Laws (As of November 2024)’
5) 34% of Organizations “Don’t Necessarily Ensure Higher Pay Goes to Better Performers”
When asked about how their organizations ensure higher pay goes to those employees who perform better, a third of respondents admitted that they couldn’t say with confidence that they actually do this. This means these organizations are failing to leverage regular performance reviews, clear and accurate performance metrics, pay-for-performance frameworks, and auditing activity to ensure compensation reflects accomplishment.
As you may expect, the report’s “more equitable organizations” are far more likely to use a range of these tactics—two to three times more likely in general.
It’s also worth noting the variety of sources of information that organizations use to develop salary ranges:
- Salary surveys/data from consulting organizations (56%)
- Salary surveys/data from trade organizations or associations (55%)
- Internal reviews of compensation data (54%)
- Wage data from government sources (such as BLS) (39%)
- Professional human resource organizations (such as SHRM, HRPA etc.) (36%)
- Competitor research (33%)
- Compensation consultants (24%)
Recommendations
Organizations should strive to establish formal policies for salary range development, and the use of multiple sources of information should be emphasized. A robust pay-for-performance framework that integrates well-defined metrics and that facilitates manager knowledge of and involvement with employee development, goal setting, and effectiveness is essential. Additionally, HR teams, managers, and leadership should be trained to communicate the best practices involved. Ultimately, organizations must plan for long-term success—pay equity is not a one-time project; it’s a continuous commitment with annual audits, reviews, and updates to ensure its longevity.
Get Even More Pay Equity Insights in the Full White Paper
The five findings detailed above are just a sample of those covered in the Affirmity-sponsored, HR.com white paper “The Future of Pay Equity and Transparency 2025”. The full 60-page report surveyed HR professionals on a wide variety of pay equity and transparency topics. Questions answered include:
- Is pay equity currently viewed as an organizational priority by your top leadership?
- What are the top five reasons for your organization’s focus on pay equity?
- How would you rate your organization’s efforts to implement pay transparency?
- What do you consider the top benefits of applying AI in pay equity and transparency?
- And much more!
Keep learning about the pay equity landscape: Download the full white paper. And for assistance with your pay equity processes, contact us today.
About the Author
Patrick McNiel, PhD is a Principal Business Consultant for Affirmity. Dr. McNiel specializes in workforce analytics using both qualitative and quantitative methods to analyze employment practices and inform employment decisions. Dr. McNiel holds a PhD in Industrial and Organizational Psychology, and he is licensed to practice psychology by the State of Texas. Connect with him on LinkedIn.