The insurance industry has a well-known pay gap that is worse than the national average and larger today than it was in 1951.
Fortunately, insurance companies are getting serious about pay equity based on gender and race — and for good reasons: One: it’s the law. Two: it’s good for business. Three: it’s the right thing to do. The current dialogue around race disparity has raised the stakes, forcing brands to assess their role in ending systemic racism, including creating a more diverse and inclusive workforce.
However, whether you’re talking about race, gender, ethnicity or other elements of diversity, inclusion initiatives won’t succeed without ensuring equal footing for all employees on the most fundamental element of the job: fair compensation. Pay disparities are both a symptom of and a contributor to inequality. That’s why the best leaders are tackling workplace bias by taking real action: finding and fixing pay equity issues.
Metrics for a Fair Workplace: Pay Gap, Opportunity Gap, and Pay Equity
The pay gap compares the average pay of all working men to all working women.
The pay gap tells us that women may not be hired into or promoted to higher paying jobs at the same rate as men, which is reflected in representation in senior roles. According to Women in Insurance’s 2018 report, Leading to Action, women hold only 11% of named executive officer positions and 19% of board seats at insurance companies.
While a pay gap reveals an opportunity gap — the gap in distribution in higher level jobs — it doesn’t represent equal pay for equal work.
That’s where pay equity comes in.
Pay equity is the concept that individuals are paid equitably for performing substantially similar or comparable work. It is driven by legislation, including The Equal Pay Act of 1963 and states’ pay equity laws that have promulgated more recently. Put succinctly, pay differences are fine, so long as they are for a legitimate reason, and not because of gender, race, or ethnicity.
5 Steps to Analyze Pay Equity Issues
1. Engage internal stakeholders.
Pay equity is a commitment — and potentially sensitive. In addition to executive buy-in, enlist support from key stakeholders in the business, such as legal, compensation, and diversity & inclusion (D&I) partners. This will help ensure execution on short-term and long-term goals.
2. Group employees doing substantially similar work.
Pay equity is about equal pay for equal (or comparable) work. Create groups of employees doing substantially similar work based on skill, effort, responsibility and working conditions. However, it is important to consider different options right from the start: There is almost always more than one possible grouping schema.