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Courage and commitment are key to achieving pay equity goals

June 9, 2022, 10:00 PM UTC

With salary transparency laws and Equal Pay Days happening throughout the year to mark the disparate wages of women and people of color, pay equity at companies is increasingly coming under public scrutiny, from consumers and prospective employees alike. Intertwined with diversity and inclusion efforts, achieving a balance in pay among workers at all levels isn’t an overnight process, especially for long-standing businesses with multiple sectors that involve myriad skill sets, responsibilities, and goals.

At Fortune’s virtual roundtable event Bridging the Pay Equity Gap on Thursday, executives from Credit Karma, Chipotle, and L’Oréal discussed their yearslong efforts toward tackling this issue and creating more egalitarian, diverse workplaces. While their approaches differ in the details and execution, they had many things in common, such as accountability, transparency, and commitment to never resting on their laurels. 

But the first move, naturally, was making a large investment in their workforces, raising wages so that employees at various positions and levels were at or near the same pay.

For Chipotle, that meant initially putting $250 million toward making the average hourly pay $15 across their 3,000-plus restaurants. The fast casual chain’s retail workforce is 51% women and 70% people of color. Chipotle also used an outside firm, Mercer, to study its books and ensure that there’s 100% pay equity at all levels. 

“At every level or within every role—whether it’s female or racial diversity—what they’re making is dollar for dollar what a white male might be making in the organization,” said Marissa Andrada, Chipotle’s chief diversity, inclusion, and people officer. “We also look at market studies and if we see that there’s a slight gap, we will make sure that we are making that 100% pay equity adjustment. It’s very on-the-ground, making sure that you’re staying competitive and really working locally with our leaders to make those adjustments so that you know what we pay is consistent with other restaurants.” 

Credit Karma, meanwhile, decided its best course of action was to rework its compensation system to eliminate the subjectivity that’s usually involved in raises or awarding bonuses.

“One of the things that I noticed was there wasn’t a lot of understanding for people on how their pay was determined,” said Colleen McCreary, the company’s chief people, places, and publicity officer, who started in 2018. “There’s a lot of research about the biases that people bring into [pay equity] decisions. I felt like a lot of managers really struggled with ‘Why is this person worth $5,000 more in pay than the person who does the same jobs next to them?’”

McCreary said Credit Karma moved toward role-based pay, so every employee in the same role gets paid the same. The company also nixed performance reviews, and, with the exception of the most senior employees, got rid of at-risk pay—so no more bonuses. “Every February and every August, we look at the role and market for the geography that they’re at and the job that they’re in, and if your pay has moved in market, we will move everybody’s pay,” McCreary added.

Those solutions wouldn’t work for L’Oréal North America, with its many subsidiaries and divisions, including retail and production.

“We are a performance-based, merit-based organization, so there is fluctuation in pay by level,” said chief diversity and inclusion officer Angela E. Guy. “We look at equity on average across the organization and in benchmarking with the global standard that has allowed for a plus or minus 3% variable for that very reason. We have Ph.D.s to assistant managers to hourly workers in our plants, so we do have to look at and analyze equity by level and by bonus structure. We’re not claiming to be 100%, quite frankly, because our marketplace is very dynamic. It’s a constant analysis.”

Part of the analysis, the three agreed, is to be vigilant about who is in your workforce and how their experiences, not to mention compensation, compare with larger trends. 

“We invite our employees to share as much about their identity as they’re willing so we can do the proper metrics to determine are we being fair in our pay?” said Guy. “Are we being fair in our promotions? Are we being fair in our learning experiences? Are we turning over more of one particular dimension or another based on the fact that they’re being paid more somewhere else? It’s really important that companies identify as much as they can about their employee population in order to say they truly are equitable.”

In order for equity to exist at all levels, the executives agreed, there have to be clear systems in place so that diversity isn’t limited to the lower rungs of the corporate ladder. At Chipotle, 60% of the top-level positions are filled by women, thanks in part to a transparent promotion process. 

“There’s a process that we have for external candidates, for example. We use TalentNeuron to help us look for diverse talent in the markets in which we’re recruiting so that we can ensure that there’s a very diverse slate coming in,” said Andrada, who noted that 10% of top executives’ bonuses are pegged to meeting diversity and ESG benchmarks. “Same thing in terms of our promotion processes, because that also levels the playing field from an equity standpoint. Our leaders are really thinking about all of the dimensions so that we have an equitable process that is not biased when we’re deciding on who’s available to be promoted.” 

Credit Karma, meanwhile, encourages its employees to regularly seek different roles within the company. “You only have to be in a job for six months before you can apply to move around. It opens the door,” said McCreary. “We guarantee if you apply for the job internally and you don’t get it, you’ll get the feedback back as to why you didn’t get it and what you can work on. Our promotion is then a calibration with a committee that’s made up of a lot of different people who don’t all look the same. We want them to go through those processes, which really helps increase people raising their hands.”

Specifics aside, the panelists agreed that the best way to achieve a pay equity goal is simply to start working toward it, regardless of how difficult the road might be.

“It has to be the commitment that you’re willing to make and how deep you’re willing to go to really drive equitable pay,” Guy said. “It can be really quite a daunting task for companies who are stepping in the middle and they have to look at their organization and say, ‘Where am I today versus where I want to go?’ It really does start with having a commitment at the top to make sure that that happens. Once you’re committed, it makes that whole process so much easier.”

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