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Statistical analysis can root out unfair pay discrepancies

On Behalf of | Mar 21, 2022 | Employment Law

Even small companies’ payrolls involve a wide range of factors. So many that it can be challenging to determine if the compensation is fair or if it shows bias. If the bias reflects race, gender, country of origin or other factors protected by civil rights laws, any size company is at risk of legal action.

Analysis can apply standard controls that categorize employees, leading managers or HR staff to identify outliers. These categories include:

  • Length of employment
  • Job title
  • Job market and location
  • Performance ratings

Once analysts flag unusual data, they can then determine if the compensation is legitimate, erroneous or discriminatory.

How it happens

Data analysts who crunch the numbers should look for the following:

  • Errors: It can be as simple as an entry error or missing information.
  • Misalignments: There could be outdated or inaccurate job titles or misaligned pay grades.
  • Experience and education: These are essential details about the worker’s background, but some employers may dismiss its validity.
  • Mergers and acquisitions: Companies often absorb or combine businesses and staff, which can lead to inconsistent job titles, pay scales or issues with the quality of the records. It can lead to inconsistent organizational structure, designations, duties, and compensation.

Weighing other factors

Even when the numbers do not lie, there may be other factors that must come into consideration. It can also help the analysts better understand compensation packages and employee pay and weigh other legitimate factors (which may they need to apply to others in the group. Conversely, analysts, managers and owners can also identify and dismiss factors that lead to inequity. These actions can have a lasting impact by avoiding legal issues and creating an equitable work environment.