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Step 5:
Conduct a Pay Equity Audit

An illustration of two papers showing pay equity audit results and data charts, with a magnifying glass.

Preparing for a Pay Equity Audit

A pay equity audit is a helpful tool for spotting any pay disparities you might have within your organization. Define your scope, gather and validate necessary data, conduct the analysis, and use the results to address issues and prevent them from reoccurring.

4 Essential Components of a Successful Pay Equity Audit


Define the Scope 

Where will you begin? Determine which job families or categories you will start with first, and what information on employee characteristics you already have in your database. You can start with one job family or one location, and give some thought to whether you can also conduct your audit through an intersectional approach with your data.


Collect and Validate Data

When you've defined your scope, you will need to collect and validate your data. If there are data limitations, start planning how you'll collect additional data promptly. Perhaps you can create an annual employee survey, or add data collection to new employee onboarding. In terms of compensation data, think expansively about total compensation and consider including commissions, bonuses, and equity, if applicable.


Conduct the Analysis

Organizational size is a determining factor when choosing an audit method to use, ranging from cohort analysis for smaller companies to multi-factor regression analysis for larger companies. (Click here to learn more about various statistical methods.) Consult with legal counsel for help creating a methodology that accounts for size without being over- or under-inclusive.


Address Disparities

Make a communications plan, consult with legal counsel, and take action to address pay disparities that are uncovered through the audit process. Some employers time remediation with their regular compensation processes to avoid making off-cycle compensation adjustments. Consider creating a consistent budget allocation for pay adjustments.

Strategies from California Employers

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Pay equity audits are not one-size-fits-all. The entire process will need to be customized to match your company’s DNA to succeed.

What might this look like? Imagine a detail-oriented residential home builder utilizes multivariate regression analysis for their pay equity audit. This method considers individual performance, experience, and certifications, ensuring a data-driven approach to identify potential inequities that would be specific to their unique workforce.

Tools to Conduct a Pay Equity Audit

We know pay equity audits can be intimidating, these resources can help!

Tailoring Your Pay Equity Audit: A simple overview of statistical approaches available to choose what would work best for your organization and resource availability.

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