Employers must get serious about equal pay

Failure to conduct equal pay audits (looking at the relative pay of men and women within the organisation), is leaving UK employers open to potential legal action by dissatisfied employees, according to research released today (May 15 2004) by specialist journal IRS Employment Review.

Although more than one-third (37.2%) of employers expect equal pay to be a priority for their organisation over the next 12 months, just a quarter of organisations have already conducted, or are in the process of conducting, an equal pay audit and a similar proportion have no plans to take any action over this issue. The research into organisational pay and reward strategies forms part of the IRS HR Prospects Survey 2004, published by LexisNexis UK.

However organisations are demonstrating their commitment to developing a coherent reward proposition for employees. The research reveals that the development of an overall reward strategy is likely to feature highly on the priority list for reward specialists in the next 12 months. In addition, employers are constantly reviewing their grading structure to ensure that it offers employees the best salary and career opportunities at the organisation.

The IRS HR Prospects Survey 2004, conducted in early 2004, is based on a survey of 519 HR departments. The questionnaire was followed up by a focus group and one-to-one interviews. The results are available in the new issue (799) of IRS Employment Review. The survey is now in its third year; more than 100 of the organisations who took part in this yearís research also participated in 2003.
Key points
Pay priorities

In the past year, pay rises were a top priority for three-quarters of respondents (74.7%). This was followed by a review of starting salaries (60.6%), pay progression (51.1%) and grading structure (48.5%).

Over the coming year, pay rises are again likely to be an important focus for two-fifths of respondents (42.4%). An overall reward strategy was seen as a priority in a further two-fifths of organisations, followed by the grading structure (39.9%).

Pay strategy
Less than one third (28%) of respondents from the manufacturing sector had conducted a review of their reward strategy over the past 12 months, compared with 39.2% of respondents overall.
The largest organisations (employing between 1,000 and 9,999, and more than 10,000 staff), are most likely to have reviewed their reward strategy over the past 12 months, cited by more than half (52.2%).
Pensions
Less than half (43.3%) of private sector employers offer a final-salary pension scheme for their staff, compared with nine in 10 (94.8%) public sector organisations. Just over half the manufacturing sector employers make this provision (50.3%). Overall, final salary schemes are being offered by fewer employers - now standing at just over five in 10 (56.1%) compared with six in 10 (63.3%) in 2003.
Largely as a result of stock market performance, more than one-third (37.2%) of employers plan to increase both the employer and employee contribution levels to guarantee funding.
Pay rises
Some of the larger organisations - those employing between 1,000 and 9,999 staff - were less likely to have reviewed pay rises in the past year; 64.4% of the sample compared to 74.7% of organisations overall.
The smallest organisations (employing up to 249 people) were most likely to have made a pay award in the past year (81.2%).
Equal Pay Audits
Apathy is particularly prevalent in the manufacturing sector, where almost one-third (31.5%) of the respondents have no plans to conduct an equal pay audit.
The public sector - where equal pay is a particular issue - still has a significant proportion (14.7%) of employers who have no plans to conduct an equal pay audit.
IRS Pay and Benefits editor, Sheila Attwood said:
ìThe findings on equal pay make worrying reading. Pay structures that are viewed by the workforce as unfair will undermine morale and working relationships. Not only is it good practice but in a tight labour market, fair pay practices will have a positive effect on recruitment and retention.

ìEmployers must provide the right opportunities for staff to progress through both salary and grading structures. But despite positive signs of growth from the economy, business recovery is a slow process.

ì With retention and recruitment pressures facing UK employers, HR managers will be determined to find ways of keeping staff and minimise the cost of finding new employees; the question is whether the overall business strategy will enable them to increase their staff reward package as part of this process.î

The full HR Prospects 2004 survey is published in IRS Employment Review (799) available from customer services on 020 - 8662 2000, price 30 or can be found on www.irsemploymentreview.com.