Fair Pay or Just Fair Talk?

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Sanjeevani Saikia: We talk a lot about fairness at work, equal opportunities, unbiased pay, all the right things. But somehow, even with all the progress and policies, the numbers still tell a very different story. And unfortunately, the pay gap still lingers. And it really makes us wonder, if we already have audits, data, and so many conversations around fair pay, what's still holding organizations back from closing that very gap? To dive into that and a lot more, I'm joined by Arshiya Singh, Director of Global Compensation at Boston Consulting Group. Hi, Arshiya.

Arshiya Singh: Hey, Sanjeevani. It's good to be here.

Sanjeevani Saikia: It's a pleasure to have you. Thanks for being here. Before we jump into the heart of our conversation, could you share a bit about your journey so far and what inspired the path you're on now?

Arshiya Singh: Sure. So like you said, I'm with the Boston Consulting Group right now. I've been with them for about six years. The opinions that I share in our conversation today will be solely mine. I'm not representing either BCG or any other organization I've worked for. Overall, I have about 14, 15 years of experience in the HR space, and then about a decade in the total reward space. So yeah, I think pay transparency, pay parity, gender pay gap is very thematic right now, both from a regulatory perspective as well as from what is the right thing to do. So it's a very topical issue that we're discussing today.

Sanjeevani Saikia: Thank you so much for sharing your journey with us, Arshiya. And with your permission, let's delve into the topic at hand today. We've been talking about pay equity for years now. There are audits, dashboards, and even annual reports tracking progress. And yet the gap still hasn't closed. It's like the more we measure it, the more we realize how persistent it is. So I believe it's important to understand what's really stopping organizations from closing it.

Arshiya Singh: See, I think when we talk about pay gaps, a lot of companies still think about it as a pay audit. I don't think that we have a data problem today. Data can be fixed at a point in time. I think it's more systemic, and it's more a culture slash courage problem. What I mean by that is, sure, you can do a pay audit at the end of a pay cycle and then correct some outliers or address some challenges. But if systemically you are not addressing the way they're hiring, what are the roles in those high visibility positions, how the roles are constructed itself to feel fair, how people are being promoted, then this pay gap addressed at the end of a cycle via an audit will reopen quietly. It's not going to go away. So I don't think that it's only a pay audit issue. Equally, it's more systemic if the pipeline itself isn't fair or equal. And here I think we're talking about gender pay gap more than other kinds of pay gap. It's very easy today for a lot of organizations to proclaim that they are fair, because there are various ways to slice and dice the data of comparable roles. But you'd still find that globally, let's say, if there's a stat that says women are still paid 20% less than men, it's also because most of the senior positions are still held by male counterparts, or some of the motherhood penalty still exists. Flexibility is still looked at with a little bit of hesitation, and things like that. So today, if we look at the pipeline for some of those high paying roles, yes, we're moving the needle in the right direction, but those still continue to be a little skewed. The third thing is that leaders and firms are also scared of making headlines and reputational damage. So yes, that is creating pressure to do the right thing. But also, what I've seen is a lot of organizations continue to stay in pilot mode forever. They will start to make some changes and say yes, yes, we know there's a problem, we're moving in the right direction, without necessarily doing too much. So yes, they say that they're trying to do something, but that pilot mode can't last forever. I think when it comes to trying to really address this systemically, culturally, I've always said that what gets rewarded gets repeated. So if there's a certain behavior, if there's a certain process, if there is a certain change that we're trying to drive, my question would really be, if we are not addressing unexplainable pay gaps, then whose incentives are being hit? Are the leaders of the organizations feeling vested in this value, in this purpose, quite similar to how we look at margins and profitability? So as we look at the KPIs for some of our senior leaders, how many organizations today have addressing gender pay gap as a strong KPI, and do their bonuses then get impacted if it's not addressed over a period of time?

Sanjeevani Saikia: I think again, you've highlighted something very crucial. Moving on, many companies claim they are very committed to equity with policies, committees, and big statements to prove it. But when it comes to daily decisions like promotions, raises, or whose voice gets heard, fairness often takes the back seat. So it's almost like equity has become more performative than practice. So Arshiya, how can organizations really move beyond that, and truly embed fairness into their culture and the everyday chaos that they're handling?

Arshiya Singh: It's a fair question. And like you rightly said, it can't be a slogan, it really has to be a lived philosophy. I don't know of any firm that doesn't say things like, we pay for performance. Now the idea is that if you can't back that up with saying performance of what, measured how, over what time period, how is it actionable, how is it not, then in a way you're not really defending what you mean by performance. It's really up in the air. So covering market positioning, internal equity, performance differentiation, in terms of it being really an operating system of fair decisions, is important. If we take a few steps back, it's important today more than ever for organizations to have their structural framework in place. What I mean by that is, you need to have a very clear job architecture, you need to have a framework, ranges within which that plumbing is in place. Like you feel there's a structure in place, which is fair, within which then there may be differentiation based on the person, the proficiency, and things like that. So really, to even have that common language across the organization, that a senior IT specialist and a senior marketing specialist, perhaps are adding the same value to the company, but based on how the market values these two different roles, the positioning of a certain individual, based on the proficiency that they bring within those common ranges, which are fair, might be different. So fairness doesn't mean paying the same, because that's not fair either. People will bring different elements of impact to the organization. That is fair, explainable, important. And again, for people, you may have all the fairness in place, but perceived fairness is also important. So we will possibly talk about communicating. The other thing is also that, as we, not just HR but also our managers, are able to have these conversations with education within the HR community, education within the managers, because today people leave due to lack of engagement, and that lack of engagement is happening via the immediate team and manager. HR is one step away. So it's very important for that fairness to be communicated via the ecosystem within which they're working, and fairness should be discussable. One third of employees today would believe that their pay is fair. Those that see it as unfair are significantly less engaged, but it's not always true that it is unfair. It's just that it hasn't been appropriately communicated to them.

Sanjeevani Saikia: Yeah, so you have highlighted something important again, that it's the perceived way, how they really perceive it. Sometimes it is fair, and most of the time employees themselves assume that they are being paid unfairly. But again, they do not measure in what terms are they being paid less. So yes, I think that's something crucial that you've highlighted. Let's talk about pay transparency now. It's often seen as some kind of a magic fix. Just make salaries public and fairness will follow. But real world experiences tell a very mixed story. In some cases, it builds trust. In others, it sparks frustration and comparison. So is transparency always the answer, or can it sometimes make things more complicated than fair?

Arshiya Singh: Yeah, it's a fair question. Look, there is a wave of change around pay transparency. And there are a lot of regulations, whether it's in the EU, the UK, North America. In Asia, ANZ and Japan have a bunch of regulations. So one is the regulatory aspect of pay transparency. If there's a law, companies have to comply with that law. And then there is an element of, do we take a one organization approach? Do we take a global approach? Do we just do what is the right thing to do in that market? Pay transparency, in my view, is a journey. I don't think it's a one size fits all approach. Looking at the readiness of an organization is extremely important. And I often think of pay transparency as switching on a bit of a fluorescent or neon light. Everything will become visible, including the cracks in the wall. So what's important is for us to acknowledge that there are cracks in the wall, either address them or be on a journey to address them. I absolutely am for the intent of the pay transparency legislations, also of this wave of change that we're all in. It does build trust when done right, and lots of studies have shown that engagement goes up and things like that. It also addresses the gaps and the information asymmetry that exists today. It does give employees more bargaining power. People feel like they're hired into new roles fairly. There is internal and external parity as well. Can it backfire? Yes, if it is noise without narrative. So when companies publish pay ranges but don't explain how individuals are placed within them, employees will see these numbers, they won't see the logic. And that can really spike dissatisfaction, even if the underlying practices are reasonably fair. So it's very important to make sure that there is context, because lack of context will create fears. The other thing is that we need to have the capabilities internally to be compliant. A lot of surveys show that fewer than one third of companies today feel prepared to meet the emerging pay transparency requirements. The EU pay legislation will come out with its rules of what it means to publish pay gaps on overall reward, monetized benefits, non-monetized benefits, what it really means. Do you have your systems in order to be able to really, at an individual level, look at the EVP and then compare it based on various metrics? The other thing is, pay transparency is not a one size fits all. What works for a tech startup or scale up company may not work for a global manufacturing firm with dozens of markets, contingent workforce, and things like that. So it's important to have a maturity based pathway and a journey. If, let's say, the top five Fortune companies have done this, is it a copy paste to my company? Absolutely not. So these are some of the risks that one needs to be mindful of as they're thinking of their pay transparency journey, so that it doesn't backfire.

Sanjeevani Saikia: Yeah, again, you have mentioned about pay transparency in a way where it's just not one size fits all. There has to be differentiation, there will be variations. But what do you think, how do people take that? How do you communicate that with your employees? Because everyone thinks that they deserve more than they are paid. So how do you communicate it? I really want to understand how the communication is done.

Arshiya Singh: Look, communication also has so many layers. As reward practitioners or as leaders of the organization, I'm going back to the fact that we need to have our fundamental plumbing in place. So you need to have a fair and defensible job architecture. You need to have market aligned, philosophy aligned pay ranges by either job, job clusters, or by grades. So as soon as you have your grading, leveling structure, you have a job architecture, you're market aligned to your comparable industry peers, you're paying fairly, your ranges are fair, the first step is to bring confidence in the employees, in HR, in the line managers, that the frameworks and ranges are fair. This has nothing to do with how an individual is being paid. But if people get confidence in the structure that sits behind some of this, then the next step is to talk about, yes, pay will be differentiated based on performance, based on position, based on person. And then it's a journey of education. These three P's of pay are not new, they have always existed, and they will drive a meritocratic, performance based culture. Think about a time when your lowest performer and your highest performer are earning the same. What does it do to business outcomes? What does it do for the overperformer who's going above and beyond? So pay equity in no way should ever mean paying the same. Pay equity should mean that your structures and frameworks are fair, they are communicated in a way that is understandable to the staff in the organization, and explainable gaps are accepted.

Sanjeevani Saikia: Yes. Now shifting gears, if we add AI to the mix, things get a little more complex. As we already know, algorithms are influencing hiring, performance reviews, and even compensation decisions. And while that sounds efficient and objective, we know AI learns from data, and data reflects our biases. So if the system itself has flaws, are we really creating fairness, or just coding inequality into our decisions in a more sophisticated way? That's something I'd like to unpack.

Arshiya Singh: See, AI is a reality that exists. It's not the future, like you said. And AI, of course, can help remove bias and help scale what humans can struggle to see. AI isn't biased or fair by design, it's a mirror. If your data is biased, AI will just hold a 10x mirror to it. So sure, AI should definitely be leveraged, and AI can help. There are AI driven pay equity tools today that can really scan huge data sets, flag patterns of unexplained pay gaps, suggest adjustments, and monitor compliance continuously and regularly. There are regulations coming out, and these tools are able to mine all of that information and inform us of what needs to be done. They can also reduce certain human biases that tend to exist. Traditional decisions are often reward confidence, certainness, culture fit. What does that mean? It could be specific to how an interviewer or an individual is looking at a certain person or position, and it can help continuously monitor. That said, AI can also be a reflection of the data that sits behind it. So biased data in, biased decisions out. So the only way to have AI help remove human bias is for the data that sits behind that AI to not be biased. There are already studies that show that AI chatbots are suggesting lower salary asks for women and minorities, even with identical profiles. Now that's a huge risk that we should be mindful of, because it is leaning on the data it's trained on. There are lawsuits, for instance, around algorithmic tools that allegedly disadvantage older, Black, or disabled candidates, and things like that. So these are things we're aware of. The tools that we build internally to help drive efficiency, to help drive data mining or continuous monitoring, we should be aware of these risks and try to make sure that our tools are not exposed to some of that risk. The other thing is that there are opacity and accountability gaps. What tends to happen is when a machine recommends a pay decision, human tendency is often to say, no, AI suggested this, and the level of confidence suddenly goes up. AI, at least till now, and I'm very sure this will change, can be confidently inaccurate when it comes to certain recommendations. So the decisions can't be taken by AI alone. Also, compensation is something so personal that it's not defensible to an employee to say a bot told me to pay you this much. There is humanity, there is a personalization associated with every individual's reward, because in a way reward is driving certain behaviors. It's an emotion more than just a number on a spreadsheet. And you really need to put real money and accountability against the problem, so there needs to be a multi-year budget for closing some of these unjustified gaps. AI can't hold decisions and be accountable, or we can't pass that accountability to it. And yes, there are risks, but can AI help us move faster, scale, be more efficient, and give us more time to make the more human, appropriate decisions? Absolutely.

Sanjeevani Saikia: Yeah. So now I'll be moving a little away from the context, but for our young listeners, for the Gen Z workforce who are joining lately, since we have an expert on the board, I'd like to debunk a myth if it's true, or is it really true, I really want to know. Lately, it's said that if a fresher joins an organization and works there for a year or two, there's a thing that you should move to another company in just two years to get more. So there could be just like above 50% hike the moment you join a new company as a fresher, right after having just one or two years of experience. So is it true? I think young listeners would love to know this.

Arshiya Singh: Look, careers today, and I do a lot of campus visits, as much as I'm meeting our current talent pool, I am amazed, firstly, by how smart they are. They're way smarter than we ever were, or I ever was at that age. Equally, I do empathize with them in terms of, they're at that cusp of this huge change, and what jobs look like, what careers look like. There are roles that never existed. AI ethicist, I had never heard of this role. Chief sustainability officer, six, ten years ago, this wasn't a role. So the way that roles are evolving, I'm not going to deny that yes, roles are changing, and it's difficult today for people to really understand what it means for their careers. Now, as we talk about pay, pay is, in my view, not linear. Even career movements are not linear. I'm seeing a lot of zigzags, I'm seeing a lot of matrixed movements. It's not truly vertical all the time. As I talk about freshers, and this whole mindset of spend two years, get a good brand stamp, and then move at a 50% hike, I think different regions, different industries, different kinds of organizations will tell a different story. So I don't believe this to be true across the board. Now, what I'm trying to say is that some of these decisions are largely personal. What today I feel would be a need for me, in my personal context, may not be the need of somebody else in their personal context. And this holds true even, let alone for their second stint after campus, but even their first stint. Somebody might want the stability of working with a renowned name like Tata's, who are more socialistic, who are more parental, who are known to stand for good values. An equally bright individual may want to work with an unknown startup, which would mean more hustle, more grind, more value delivered, more gratification, more freedom, more autonomy. And pay, I think decisions today, and I know this from my conversations with various students and the young Gen Z workforce, is that pay is a very small element of the EVP that they're looking at as they're picking organizations. That has grossly changed from when I was on campus to today, where pay was the number one thing that we would see. Today, I'm asked questions like, what is your organization's stand on climate and sustainability? What is your organization's stand on gender fluidity? What do you stand for as an organization? These are not questions that were asked by the talent pool earlier. So I do believe that pay is one thing that they look at. They're looking at brand, they're looking at culture and flexibility and freedom of choice, the learning capabilities that the organization has to offer, the pathways that it opens up. So I think it's far beyond just that pay, that 50% hike. And I think that Gen Z has a lot of power to reason. They're thinking about what truly brings happiness to them in their personal context. So it's a very personal decision. Many people are even moving at pay cuts, or many people are even moving without any pay rise, because they see a broader attraction to something out there.

Sanjeevani Saikia: Yes. Well, Arshiya, thank you so much for answering this query of mine. We're almost at the end of today's conversation. But before we close, and I keep coming back to this thought, despite all the progress, most organizations still seem unsure where to actually begin. Because policies are easy to draft, but turning fairness into action takes real intent and accountability. So Arshiya, if companies really want to move from talk to action, what's the first real step toward making fair pay a reality?

Arshiya Singh: Yeah. So I'll tell you, even this concept of fair pay, it's very, very important for companies to define what fair pay means for your organization, and you have to commit to making it measurable. Making it measurable for the organization would mean holding your leaders accountable and having their pay reflect that accountability, building a KPI around it. What I mean by that is the real first step would be to define what you mean by fairness. Does fair mean paying every individual at the market median for the role? Does fair mean equal pay for equal work? Does fair mean moving in the direction of closing historical pay gaps over time? So it can mean various different things, it can mean all of these things. If you're able to identify what fairness means, what those pillars are, and then you're able to define measurements of how you're making progress in those areas, what are the targets that you've set for your leaders in the organization, to make sure that staff and companies are moving in that direction, that's the real first step. And then you need to really have a fact based baseline diagnostic. So before all these slogans and campaigns, run the hard analysis. Go back to having your job architecture, having your ranges, try to see what are those trends by gender, ethnicity, any other relevant dimensions that you want to look at when you're talking about gaps, and then quantify explainable and unexplainable gaps. It's okay to have explainable gaps, and then put money where your mouth is. I'm continuously going back to put money where your mouth is, hold people accountable to this. And then, obviously, communication is key. You have to communicate with humility and intent. Employees don't expect perfection. Like I had said at the start, leaders are so scared of reputational damage, sometimes so scared of having the hard conversations. But sometimes employees just expect honesty, and they just want to see progress. So it's okay to share the baseline, acknowledge that there are certain things that we have under invested in in the past, we're aware of it, and we're moving in the right direction. That itself will create a lot of trust. And you need to integrate equity into the whole talent lifecycle. Reward structures and frameworks are one part of it, but remember, closing the gap is not just about adjusting salaries this year. Like I had said, it is about fixing the hiring pipelines, the promotion criteria, the performance management, the flexibility. Is there still a motherhood penalty? What is the culture? So you can do point in time pay audits and fixes, but then systemically embedding it into the culture is a more long term journey that one needs to be conscious of.

Sanjeevani Saikia: Yes. So Arshiya, thank you so much for addressing all our concerns and giving your insights to our listeners. We have reached the end of today's episode. Before we let you go, do you have any final message for all our listeners?

Arshiya Singh: I do want to appreciate Sanjeevani, all the work that you and Vantage Circle are doing. I think some of these topics are so relevant. It's important not just for young listeners, but even for myself. I kind of keep on top of all of the publications and thought partnership from Vantage Circle, because change has become such a constant, and the pace of change has accelerated so much, that I think I'm coming away from every discussion with you and your counterparts having learned so much more. So it's great work that you're doing. And I know that all of us in the HR community truly value all the information that we're receiving via all of these channels.

Sanjeevani Saikia: Arshiya, one last time, thank you so much. It was an absolute honor for us to have you on the show, and wishing you a bright future ahead.

Arshiya Singh: Thanks a lot. Okay, thank you. Bye.

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