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Salary Inequities Case Study
Application Case Salary Inequities at AstraZeneca
More than 50 years after passage of the Equal Pay Act, women in America still earn about 80 cents for every dollar earned by a man. That adds up to a loss for the average female worker of about $380,000 over a lifetime.
Recently, the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) entered into an agreement with AstraZeneca, a large international pharmaceuticals firm, for the company to pay some of its female sales associates a total of $250,000. 137 AstraZeneca had a contract valued at over $2 billion with the U.S. Department of Veterans Affairs to provide drugs to hospitals around the country. That made it subject to Executive Order 11246, which aims to ensure that employees of U.S. contractors and subcontractors with federal contracts pay their employees fairly without regard to sex, race, color, religion, and national origin.
After conducting a compliance review, the OFCCP concluded that AstraZeneca violated Executive Order 11246 by failing to ensure certain women employees were paid fairly. According to the OFCCP lawsuit, an AstraZeneca Business Center had routinely paid some of its female "primary care" and "specialty care" level III pharmaceutical sales specialists an average of $1,700 less than men with the same positions. Because of the company's pay secrecy policies, many of the women didn't know they were being paid less. In addition to the financial settlement, AstraZeneca and OFCCP will review records of the firm's female employees in 14 states. If they find additional statistical evidence of wage discrimination, the company must remedy it.
Questions
AstraZeneca has brought you in as a compensation consultant. Here are the questions they would like you to answer for them:
11-13. Although the case with OFCCP is closed, we wonder if there are any less discriminatory explanations possible for why our women sales reps on average earned less than men. If so, what are they?
11-14. Our own company now uses a point method to evaluate jobs for pay purposes, and each resulting job class also has a rate range associated with it. Sales associates are now paid a salary that is not based on incentive pay. List three specific things we can do to ensure that a similar problem (inequitable pay based on gender) does not arise again, assuming they continue using the point plan.
11-15. What sort of compensation plan would you recommend for us, and why?
SALARY INEQUITIES CASE STUDY
After analyzing the Astra Zeneca case study, team “A” reflected on the case study questions that would be responsible for supporting potential resolutions in the future in order to avoid further inequitable circumstances from arising from Astra Zeneca.
Questions
Question 11-13: In some of the cases it is true that women tend to earn less than their male counterparts do even if they do the same type of jobs. One of the reasons why this happens has been due to education with many employers citing that there are more educated men than females, which increases the wage gap. Women also end up working in those departments where they earn less than their male counterparts do. The implication is that a company may not put women in charge of the major processes despite having the same qualifications, which leads to them having a lesser pay than the males. The other reason why women earn less than men in the course of their lifetime is because of the maternity leaves that they take. The company does not provide them with any payment during the maternity period, which means that they lag behind their male counterparts in terms of earnings in the process. Similarly, men tend to change jobs more often and in the process have a larger bargaining power than women. Coupled with the secretive nature of the salary policy in the company, are paid more than women despite doing the same job. Consequently, the company has a voluntary overtime program that has more male participants than women. The issue of work-life balance is one of the reasons why men earn more than women as they take part in more overtime activities that increase their chances of earning more. The company has ensured that women and men are fairly compensated for their services to the company. However, it is difficult to deal effectively with the wage gap as more women end up in departments that offer a lesser pay.
Question 11-14: There are several ways and approaches that Astra Zeneca can initiate in order to ensure that inequitable pay based on gender does not occurred again. The following are three methods that can be incorporated into Astra Zeneca’s human resources policies and procedures: 1) Establishing a fair wage setting technique to assured that wages are unrestricted from sexual orientation disposition. 2) Implement practices and policies which strengthen pay worth. 3) Commence a compensation value examination to select areas and professions where sexual orientation inconsistency may exist with the objective that it can be resolved. Furthermore, it is crucial for human resources to ensure that pay equity is aligned with employment laws. The role of human resources with regards to pay equity is to ensure pay fairness begins with the salary offer and promotion levels. In addition, documenting initial salary decisions can also be used towards future litigations. Also, pay equity in the workplace creates employee satisfaction, and influences the organization’s reputation (“Sex discrimination in social work careers”, 1979)
Question 11-15: Compensation Plan
First understanding the laws that require men and women to receive equal pay for equal work. “The Equal Pay Act requires that men and women be given equal pay for equal work in the same establishment. The EPA provides that employers may not pay unequal wages to men and women who perform jobs that require substantially equal skill, effort and responsibility, and that are performed under similar working conditions within the same establishment” (EEOC, 2017). Secondly the company will institute an internal policy prohibiting wage discrimination. Ensuring that all employees are paid fair and equal wages based on position and skill. Thirdly, employers, supervisors and HR managers need to make sure that all employment decisions regarding promotions, raises, bonuses, etc., are based on legitimate and nondiscriminatory factors such as skill, merit and performance. Step four focuses on providing training for supervisors and managers to avoid wage discrimination. Step Five, requires documented salary guidelines and requirements for any bonuses or overtime based on fair, objective, and measureable criteria. Step six, initiate audit pays and frequent reviews, ensuring that we are not engaging in any discrimination. This will reduce the chance that we could be faced with a claim for wage discrimination. Step seven for the company is to ensure we are hiring an integrated and diverse workforce, and that qualified candidates regardless of gender and that they are being hired based on education, skill and merit. Step eight, provide timely and effective performance evaluations. This will set expectations and show employees if they are meeting them or not. Finally, step nine having an open pay policy. This clearly affords the employees to engage in mutual protected activity and improve wages, hours and working conditions.
Summarize the Answers
Analyze Current Job Market Compensation Plans and Pay Scales In Comparison To Astra Zeneca
Explain How Team Members Will Use Lessons Learned
Conclusion
In conclusion
References
Barón, J. D. & Cobb-Clark, D. A. (2010). Occupational Segregation and the Gender Wage Gap in Private- and Public-Sector Employment: A Distributional Analysis. Journal of Economic Record, vol. 86, no. 273, pp. 227-246
EEOC. (2017). U.S. Equal Employment Opportunity Commission. Equal Pay Act of 1963. Retrieved from https://www.eeoc.gov/laws/statutes/index.cfm on March 27, 2017
Sex discrimination in social work careers. Jennings, P L; Daley, M; National Library of Medicine. Social work research & abstracts
15.2 (1979): 17-21.
Zoller, Beth. (2017). XpertHR, Legal Editor. How to Prevent Wage Discrimination and Ensure Equal Pay. Retrieved from http://www.xperthr.com/how-to/how-to-prevent-wage-discrimination-and-ensure-equal-pay/9836/ on March 25, 2017
