Lack of formal processes, uninformed decisions drive unfair pay: study

A lack of formal processes leads to a culture of biases and promotes inconsistencies in hiring and pay decisions across businesses in at least 50 countries. The survey covered about 707 employers in the APAC region as well.

About 27 percent of the businesses have no formal processes to prevent a bias in base pay, 58 percent have no mechanism to avoid bias in their incentive system and for 76 percent of the companies surveyed, there are no internal systems in place to monitor ad-hoc cash awards, according to the 2018 Getting Compensation Right Survey by Willis Towers Watson.

Almost 18 percent i.e. one-fifth of the companies end up incentivising those employees who do not even meet expectations, a previous Watson study shows.

“There is a significant threat that, if there is not enough differentiation in pay and through the use of incentives, we will see higher costs for New Zealand employers over the long term,” said Adam hall, Head of Talent and Reward at Willis Towers Watson.

When it comes to fair pay, many companies fall behind even though they have formal processes in place. The gender gap in pay is 13 percent in the APAC region while globally it is 28 percent.

The report recommends companies to leverage technology when it comes to removing human biases from decision making. Remuneration softwares can help elevate an organization’s collective decision making power by measuring it against global benchmarks. Implementing technologies that incorporate improved analytics capabilities and reporting techniques is crucial for organizations to make better pay decisions.