Pay Equity Analysis

Pay Equity Analysis

BUSINESS CHALLENGE

A new federal contractor, without prior experience in the OFCCP enforcement arena retained DCI for AAP services. Prior to retaining DCI, the contractor had been unaware that Executive Order 11246 requires contractors to conduct annual reviews of their compensation systems to identify potentially illegal pay disparities.  Having never conducted a pay equity analysis, the contractor had many questions about what a pay equity analysis is, what data are required to conduct one, what information is provided by a pay equity analysis, and how other federal contractors use their pay equity analyses.

PREPARATION

DCI set-up a 30 minute webinar to walk the contractor through a history of pay equity case law, the compensation analysis requirements under EO 11246, data requirements, DCI deliverables and services, and compensation equity best practices. DCI explained that consultants use DCI’s proprietary pay equity software, HR Equator, to conduct compensation equity analyses as part of the standard AAP preparation.

SOLUTION

After the webinar, DCI sent the contractor a formal data request outlining the variables typically found in an HRIS that are useful for pay equity analyses. To help the contractor prioritize, DCI categorized the variables in terms of their importance to an effective pay equity study. Some variables were designated as essential, others as very useful, and others as helpful.

Over the course of weeks, DCI worked with the contractor to construct a complete and accurate compensation database. After completing the database, DCI conducted a pay equity analysis. The analysis included establishing pay analysis groups (PAGs), evaluating statistical coverage, conducting baseline regression analyses on large PAGs and Fisher’s exact tests on small PAGs, and producing cohort analyses for groups not amenable to statistical analyses. At the conclusion of the analysis, DCI conducted a close-out call with the client to review and explain the results and to establish recommendations and next steps.

RESULTS

The client tracked the basic DCI analytics to monitor problem areas in its workforce and eventually upgraded to DCI’s advanced analytics to help establish how adjustments should be made in areas that appeared at risk for pay inequity. The advanced analytics included in-depth follow-up statistical analyses and specific adjustment strategies and recommendations.

Post-adjustment results indicated elimination of pay disparities.

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