By: Don Lustenberger and Lisa Harpe
Series Introduction
Earlier this year DCI experts and co-authors of this post, Lisa Harpe and Don Lustenberger, hosted a pay-equity webinar on the topic of “expert vs. robot.” They contrasted the more conventional approach of a consultant (i.e., an expert) conducting a Title-VII pay-equity analysis on a snapshot of pay data with newer, more automated approaches (i.e., robots) that leverage software and may integrate with an organization’s HRIS to streamline the process.
This summer, in a feature blog series on pay equity, Dr. Harpe and Dr. Lustenberger will go into more detail on the process for conducting a pay-equity study and how the expert and robot approaches can help or hinder organizations’ efforts to comply with Title VII and to pay employees fairly.
This first installment explains the ‘expert’ versus ‘robot’ approaches to conducting a pay-equity study and describes how the more traditional approaches utilizing ‘experts’ differs from these newer, automated approaches (i.e., ‘robot’). Future posts in the series will contrast the expert and robot approaches to pay equity through various phases of a typical project, spanning the following:
- Project kickoff and data cleaning
- Planning and conducting the analysis
- Investigating results and executing pay adjustments
The final installment will consider the crucial role of legal counsel in expert vs. robot approaches to pay equity studies.
Let’s Define Expert vs. Robot in Pay Equity
Our discussion for this series focuses on pay equity studies that aim to help organizations comply with Title VII of the Civil Rights Act of 1964, which prohibits employers from discriminating against employees on the basis of race, color, religion, sex, and national origin. These studies are typically proactive in nature and seek to ensure that those who conduct work of a similar nature and who have similar responsibilities and skills are not paid differently because of sex, race, or ethnicity. These studies are designed to identify gender and / or race pay disparities that should be investigated by the organization. Additionally, these studies may be used to recommend pay adjustments to ameliorate these disparities.
The Expert Model
The traditional “expert” model for conducting pay equity studies involves having a consultant, external or internal to an organization, with an advanced degree, typically in Labor Economics or Industrial Psychology or other discipline with a heavy quantitative foundation, partner with an organization’s compensation team and legal counsel to plan and execute a study of employee pay. The consultant will typically have prior experience conducting pay-equity analyses that can be leveraged throughout the project to ensure the study is executed in accordance with professional and industry standards.
One critical aspect of this more conventional expert approach involves the selection of a snapshot date for the study—a point in time in which a compensation roster is extracted from an organization’s HRIS to be analyzed for the study. The consultant would receive this roster from the compensation team to clean and then analyze. And it’s not uncommon for the complexion of an employer’s workforce to change slightly (due to hires, promotions, or terminations) between the time when the roster is extracted and when study results, including any guidance on pay adjustments, are delivered back to the compensation team. Many employers choose this approach given the sensitivity of the underlying data and the advantages of using an expert with in-depth knowledge and experience conducting these types of studies, interpreting the results, and assisting employers with investigating and resolving pay disparities. In addition, most of these studies are conducted with the expert working with legal counsel to ensure that the data, analyses and results are covered by attorney-client privilege.
The Robot Model
The newer “robot” approach to conducting pay equity studies conversely highlights not who conducts the study but how the study is conducted. (It just so happens that how a study can be conducted via this robot approach influences who can conduct the study.) These approaches, offered by vendors, aim in part to automate the work of the expert consultant, often by leveraging software that may integrate with an organization’s HRIS to conduct pay equity studies almost instantaneously based on some user configuration inputs. Because these approaches can analyze live data, they can circumvent the need to select a snapshot date for the study and instead can be run repeatedly, on demand, and at different points in time. And because they rely on simple user inputs, the analyses can essentially be conducted without an expert consultant at the helm.
Thus, the appeal of these robot approaches may seem clear: Organizations can leverage such vendor platforms to quickly run pay equity analyses when it’s convenient for them to do so, without relying on expert-consultants who may be more expensive and take more time to conduct the analyses and deliver the results. Additionally, these platforms can recommend pay adjustment figures for employees in real time and allow compensation teams to immediately see the effects of those adjustments.
To be clear, the robot approach can certainly still involve expert consultants in the pay-equity analysis. But in many cases, the software is explicitly designed to reduce the role of the expert in the process and replace it with something else. One lingering and critical question is: What is that something else? In subsequent installments of this blog series, we’ll discuss how these platforms function and how they may help or hinder organizations’ efforts to proactively address pay equity.
In the next installment, we’ll discuss how an ‘expert’ and ‘robot’ would kick off the project and clean data for the pay equity study.
