Unlocking Data to Drive Equity: Pay Equity and DE&I in Consumer Organizations

By: Darren Gest, Gregory Stoskopf and Douglas Tapp

There’s recognition of how critical diversity, equity, and inclusion (DE&I) are to business performance and employee engagement. The challenge lies in translating a “nod of the head” to the value of diversity and inclusion into impactful actions and programming. (1)

Current events, headlined by the ongoing global COVID-19 pandemic, a worldwide social justice movement and a turbulent election year in the United States have galvanized Consumer organizations to modernize, accelerate, and announce their DE&I views and commitments (for example, this announcement from Coca-Cola to its employees). (2)

Within organizations’ DE&I platforms, a heightened focus on pay equity across strategic, legal, and political domains is propelling Consumer executives to not only dive into existing pay practices within their own walls, but also prioritize it across their ecosystem of partners, suppliers, customers, and communities. As we shift into 2021, actions under the Biden administration will likely ignite employers to take an even closer look at consistency in pay rates and gender-based pay inequality across the board. (3) This is juxtaposed with recent research suggesting that more than half (56 percent) of organizations do not have a formal process in place to address pay equity, and 70 percent do not use salary structures to manage pay. (4) 

To put it simply, Consumer organizations have a mandate now more than ever to drive growth, employee belonging, and authentic brand responses through impactful action (e.g., Ben and Jerry's). Establishing equal pay practices rooted in relevant, real-time data analysis is a tangible, necessary, and near-term step for HR to take to advance that mission. (5) Further, organizations can leverage pay equity data to uncover immediate root causes of organizational inequity as well as areas of opportunity across HR and DE&I roadmaps for years to come.

The business case for conducting pay equity analysis is relevant well beyond the paycheck—equipping organizations to identify root causes of inequity across HR policies and unlocking a future culture of inclusivity.

If the past nine months have shown us anything, it is that in order to stay ahead of disruption, organizations must put people at the heart of their workforce decisions. As the future of work and talent continues to take priority within the C-suite of Consumer organizations, failing to address pay equity will impact the strength of their talent, employee engagement and ultimately, an organization’s bottom line. (6)

To that end, the Consumer workforce is rightfully prioritizing a high standard of equity and inclusion in the workplace and demanding greater pay transparency in the process. (7) While pay transparency does not necessarily equate to pay equity, Consumer organizations can certainly benefit by progressing ahead of the narrative as employee and public pressure continues to mount. (8) In the pursuit of generating trust, belonging, and heightened performance, while also avoiding potential legal action or costly class-action lawsuits, organizations are conducting pay equity studies to address the existing pay gaps and inequities across workforce demographics.

An earlier study showed that organizations with inclusive cultures are twice as likely to meet or exceed financial targets as those without, three times as likely to be high-performing, six times more likely to be innovative and agile, and eight times more likely to achieve better business outcomes. (9) In an era where the importance of DE&I practices is at an all-time high and employee engagement is at an all-time low, it is critical to consider how compensation plays a role in fostering an inclusive culture and building long-term trust among employees. There are proven links between diversity, inclusion, engagement, and organizational performance. Pay equity—and how it is managed and communicated across the organization—can drive that positive change.(10)

Shifting from ideas to action: An approach to launching a global pay equity study

One of the key activators in Deloitte’s DEI perspective is the notion that well-defined analytics drive organizational accountability— they paint a picture of an organization’s inclusion practices, including how they value and compensate team members across all levels within their organization. (11) Digging into foundational pay data allows leaders the opportunity to highlight tangible gaps, make direct adjustments impacting the bottom line, and identify new areas of focus to advance broader HR and DEI objectives.

The following steps outline, at a high level, the actions organizations should take to identify, address, and resolve existing pay inequities while uncovering broader opportunities within the HR arena:

• Job Equity Assessment: The first step in analyzing pay equity is understanding the workforce and organizational taxonomy. Consumer organizations present a uniquely complex structure across their many pockets (e.g., Supply Chain, R&D, Field Sales, Store Ops, and Brand Managers). It is key to understand the role, expectations, and nuances across each operational area. To do so, build a dashboard which outlines the gender and race/ethnicity representation of the workforce within various levels of the organization. Job equity, defined as equal opportunities across all genders and race/ethnicity classes, can directly impact pay equity. Upon reviewing job equity, conduct a pay-gap analysis (by level) to begin your pay equity study.
• Equal Pay Assessment: After considering job equity positioning and corresponding views of gender and race representation throughout the business, begin building statistical models and running regression analysis to identify equal pay disparities in the organization by both gender and race/ethnicity cohorts. Then, review pay disparities to determine whether nondiscriminatory rationale exists for statistical variances, such as length of service, experience, and education. If necessary, engage a legal team to align on analysis results and options.
• HR Strategy/Program Analysis: Conduct a comprehensive root cause analysis of HR programs where pay bias may exist or where those programs/policies may be contributing to pay disparity. To direct your analysis, review HR programs, such as talent acquisition practices, talent management, performance management, learning and development, and general pay administrative practices of compensation programs. There will be opportunities across each and should be addressed/prioritized as a system vs. siloed.
• Strategic Communications: The linkage between DE&I and pay (equity) makes this a well-known, emotional and nuanced topic across the workforce. With that in mind, it is critical to develop a thoughtful and proactive strategy to gain leadership alignment, stand up comprehensive change management efforts, and develop targeted communications to engage each relevant stakeholder or stakeholder group. Ensure the plan is integrated with broader enterprise DE&I initiatives, communications, and employee engagement efforts to maximize effectiveness and consistency upon deployment.

Get additional Consumer Industry insights from Deloitte's leading thinkers in the future of work, pay equity, and DE&I r arenas:

Co-authors: Darren Gest, Gregory Stoskopf and Douglas Tapp |

Content Contributors: Kimberly Betts, Colleen Cheesman, and Maggie Collins

About Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more

Deloitte is a leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax and related services. Our global network of member firms and related entities in more than 150 countries and territories (collectively, the “Deloitte organization”) serves four out of five Fortune Global 500? companies. Learn how Deloitte’s approximately 312,000 people make an impact that matters at www.deloitte.com.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively, the “Deloitte organization”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser. No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and their related entities, are legally separate and independent entities.

? 2020. For information, contact Deloitte Touche Tohmatsu Limited.

(1)    “Diversity and Inclusion.” Deloitte Insights, www2.deloitte.com/us/en/insights/topics/value-of-diversity-and-inclusion.html.

(2)    “Where We Stand on Social Justice - News & Articles.” The Coca-Cola Company: Refresh the World. Make a Difference, www.coca-colacompany.com/news/where-we-stand-on-social-justice.

(3)    Stephen Miller, CEBS. “Biden Likely to Ramp Up Pay-Equity Fight.” SHRM, SHRM, 30 Nov. 2020, www.shrm.org/resourcesandtools/hr-topics/compensation/pages/biden-likely-to-ramp-up-pay-equity-fight.aspx.

(4)    “Only 44% of Organizations Have a Formal Process to Address Pay Equity.” Salary.com, 2020, https://www.prnewswire.com/news-releases/only-44-of-organizations-have-a-formal-process-to-address-pay-equity-according-to-new-data-from-salarycom-301189443.html

(5)    Fromm, Jeff. “On Ben And Jerry's, Gen-Z And Social Justice: How 2020 Has Changed Branding Forever.” Forbes, Forbes Magazine, 30 Sept. 2020, www.forbes.com/sites/jefffromm/2020/09/30/on-ben-and-jerrys-gen-z-and-social-justice-how-2020-has-changed-branding-forever/?sh=79f41c5f6a66.

(6)    Stephen Miller, CEBS. “U.S. Companies Are Working to Fix Pay-Equity Issues.” SHRM, SHRM, 16 Aug. 2019, www.shrm.org/resourcesandtools/hr-topics/compensation/pages/companies-are-working-to-fix-pay-equity-issues.aspx.

(7)    An, Vickie. “Why Skills, Not College Degrees, Will Drive the Post-Pandemic Labor Market.” Inc.com, Inc., 2 Nov. 2020, www.inc.com/magazine/202011/vickie-an/talent-management-labor-staffing-future-of-business-2020.html.

(8)    Cooney, Samantha. “The Benefits and Downsides of Pay Transparency.” Time, Time, 14 Aug. 2018, time.com/5353848/salary-pay-transparency-work/.

(9)    “Pay Fairness Transparency Can Fuel Employee Engagement.” WorldatWork, worldatwork.org/docs/newsline/newsline-2017/11-november/nov-18/pay-fairness-transparency-can-fuel-employee-engagement.html.

(10)  Bourke, Juliet. Which Two Heads Are Better than One?: How Diverse Teams Create Breakthrough Ideas and Make Smarter Decisions. Australian Institute of Company Directors, 2016, aicd.companydirectors.com.au/-/media/cd2/resources/director-resources/book-store/pdf/which-two-heads.ashx.

(11) “Deloitte Diversity, Equity & Inclusion Services.” Deloitte United States, www2.deloitte.com/us/en/pages/about-deloitte/solutions/diversity-inclusion-strategy-services.html.