Over the past two years, my team and I have been examining the persistent, and frankly indefensible, issue of pay inequity. Our (The Josh Bersin Company) latest study has revealed some troubling insights, indicating that pay inequity remains an entrenched and systemic issue.

Since 2017, there has been some progress in reducing the gender pay gap, which has narrowed from 18% to 15%. However, this progress has been slow and inconsistent. For managerial roles, the gap has decreased more significantly, from 14% to 10% over the same period, suggesting that leadership roles are making strides at a faster pace than the general workforce. Yet, these advances still fall short of what’s needed, calling for heightened focus from both organizational leaders and society at large. At the current rate, full gender pay parity isn’t expected until 2048, while equality in managerial pay is projected for 2036.

In other words, true pay equity remains a generation away. But this issue transcends sociology or politics—it’s a business imperative. Our data reveals that pay equity is not simply a compliance checkbox or a "nice-to-have"–-it’s 13 times more influential on employee retention and satisfaction than pay levels alone.

Leading organizations understand that fair compensation cultivates a positive work culture, enhancing both engagement and productivity. This is increasingly evident in companies like Salesforce, American Airlines, and SAP, which are demonstrating that embedding pay equity across all business practices and proactively addressing potential inequities in talent management can drive profitability, increase customer satisfaction, and secure a competitive advantage.

If you’re ready to make lasting strides in closing the pay gap, here are some practical steps you can take as a CHRO to lead meaningful progress toward pay equity.
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Articulate a strong internal purpose

Develop a compelling rationale for the significance of the pay equity strategy, focusing on its potential to enhance financial performance, elevate customer satisfaction, and improve talent attraction and retention. In 2025, it will be crucial to underscore the relevance of adhering to legal standards, such as the European Union Pay Transparency Directive, to ensure compliance and mitigate risks. Furthermore, this initiative should be aligned with the organization’s mission, vision, and values to foster a supportive environment that encourages buy-in from all stakeholders.
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Assemble a diverse cross-functional team

Establish a team encompassing a wide range of organizational representation, including HR, Legal, Finance, and others, to ensure your pay equity initiatives are comprehensive and inclusive. Clearly outline roles and responsibilities to promote accountability and facilitate effective collaboration among team members. Maintain a consistent meeting schedule to foster ongoing momentum and ensure alignment across the team as you work toward your pay equity goals.
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Conduct an in-depth pay equity audit

Gather comprehensive data on employee compensation, covering base pay, bonuses, and benefits, segmented by key demographic groups to spot potential pay disparities. Leveraging AI tools can be invaluable here, helping to identify underlying factors contributing to these gaps, such as inequitable hiring practices, bias in performance management, or issues in promotions. With these insights, develop targeted, organization-specific recommendations to effectively address and resolve any identified pay inequities.
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Commit to pay transparency

Providing employees with access to compensation information, along with comparisons to other roles in the company and industry benchmarks, will cultivate a culture of fairness and trust. Furthermore, it is essential to communicate the criteria that govern pay increases, promotions, bonuses, and other compensation-related decisions in clear ways, ensuring everyone understands how these processes work.
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Revamp compensation policies

Implement standardized pay practices across the organization and commit to ongoing reviews of these policies to ensure continued fairness and equity. Securing buy-in from the c-suite will be crucial for enforcing these practices. Emphasize the adoption of genuinely inclusive and skills-based job evaluation methods to guarantee that compensation accurately reflects the true value of employees' contributions.

Related: Pay transparency directive could spur 'massive change management exercise'
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Rethink talent processes

Start by implementing structured interviews and standardized criteria to reduce bias in the hiring and recruitment process. Strive for objective performance metrics and provide consistent feedback to all employees. Ensure that access to training, mentorship, and project opportunities is equitable, allowing every employee the resources they need to develop and progress in their careers.
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Leverage technology and analytics for insight

As previously mentioned, utilizing AI-driven tools to analyze compensation data and uncover patterns of inequality can be highly beneficial, allowing for proactive measures to tackle these issues. It’s crucial to establish systems for ongoing monitoring to ensure that your pay practices continuously align with equity standards in the long run.
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Provide training and communication

Offer managers training that highlights the importance of pay equity and provides strategies for fair decision-making, including methods to reduce unconscious bias. Integrate pay equity education into HR development programs, especially for HR Business Partners and Talent Acquisition specialists. Additionally, foster goodwill and grassroots support by educating employees about the principles of pay equity, clarifying their rights, and advising them on how to raise any concerns regarding pay discrepancies.
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Evaluate and continuously improve

Set clear, measurable goals for achieving pay equity and commit to ongoing progress tracking. Consistently share updates on advancements with all stakeholders, including employees, leadership, and external audiences. Transparently communicate the steps taken to promote pay equity and the outcomes achieved, reinforcing your organization’s commitment to this vital initiative.
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Embrace an inclusive culture

Ultimately, cultivate an environment that promotes open discussions about pay equity by creating safe spaces for employees to express their DEI concerns. Recognize and celebrate key milestones to highlight the significance of these initiatives. Going forward, weave equity and inclusion into the core of your organization, ensuring that policies and practices consistently foster a fair and inclusive atmosphere for everyone.

In conclusion, pay equity goes beyond simply meeting regulatory requirements; it is fundamentally a vital business imperative and a moral obligation. By creating equitable workplaces, organizations not only advance fairness but also unleash opportunities for innovation and drive overall success.

Kathi Enderes, SVP Research and global industry analyst at The Josh Bersin Company