Verifying raise suggestions & analyzing costs
The previous articles helped you set up the distribution of raises among your employees according to your organization's policies and pay principles. In this article, we will delve into the specifics of assessing the expenses involved in reaching your pay gap target, as well as the total cost and implications of pay equity.
The Overview graph
After configuring the raise suggestion in your analysis (see Getting suggested remediation actions), the Overview graph looks slightly different. It includes dark dots, which indicate employees receiving a raise. For each employee, the corresponding suggested raise can be found in the employee list below. In addition to the suggested raises can manually configured, the actual raises you plan to implement in the employee list directly. The calculated pay gap will automatically adjust based on your actual raises. If the system fails to meet the pay gap target, it means that the restrictions you've imposed are too strict. It indicates that the system has run out of potential employees to whom it can allocate in order to reach the pay gap target.
Cost scenarios
The Cost Scenarios tab contains a figure showing the cost of closing the pay gap.
Access to the Cost Scenarios tab
It is important to note that if you have more than two demographic groups, the graph shows you the cost of all gaps that are reaching the target or above. In the graph below, we can see three lines:
The red line shows the cost of closing the gap(s) using a naive method of raising the compensation of all individuals of the underpaid gender by the same percentage.
The green line shows the cost necessary only to close the gap(s) (PayAnalytics does not recommend this method, it is only included in this picture to show the mathematically lowest cost of closing the pay gap).
The blue line shows the balanced approach with the percentages you chose when you ran the analysis. If the compensation variable is monthly salary, then the cost is an additional cost per month. If the salary variable is annual salary, then the cost is an additional cost per year.
If the pay gap for certain groups is much higher than for others, then the maximum raise that you set in the analysis form may prevent you from bringing that pay gap down considerably. In this case, the cost graph will not show any cost scenario below that pay gap. If this is the case, we recommend that you run the analysis again, using a higher maximum raise.
Cost scenarios view
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In the employee list on the overview page, you can now filter the raises that are larger than zero, have the table exported to excel, and are reviewed by a reward manager.