Title deflation and the new pay equity laws

Title deflation and the new pay equity laws

Title deflation and the new pay equity laws

By Kate Reichert, HR Business Partner & Compensation Specialist, Trüpp.

One of the biggest banes of my existence as a compensation professional would have to be job titles. A good title, and one that is legally sound, will reflect the actual responsibilities of the role, be tied to an established job description, and transferable across an industry. Unfortunately, job titles are too often used as incentives or bargaining chips and have become decoupled from actual job responsibilities and qualifications. As a result, inflated titles are everywhere; organizations start calling an employee a “Director”, but they have no people reporting to them or even any real functional oversight. Or, there are the titles that don’t really mean anything, like “Director of First Impressions”. In thinking about the employment law trend toward Pay Equity legislation, I began to wonder how the titling landscape might change. Instead of inflating titles, will some organizations begin to deflate titles as a way to pay qualified employees less money?

Here’s what I mean by title deflation: let’s say an organization is looking to hire a Business Analyst. They choose their final candidate and realize they can get away with paying less for the role by placing the new employee in the Associate or Assistant Business Analyst job title – a lesser title – even though the qualifications and responsibilities in the job posting are the same as other employees in the Business Analyst role.

Every organization has different business needs and will therefore have varying titling structures. Smaller companies are going to have less need for long career-ladder titling, while larger organizations are generally going to have a need for more varying levels of positions. But how is consistency across an organization being maintained? How are decisions to bring one person in at the juniortitle and another in at the journeyman level being justified? Where are the checks and balances to ensure titling conventions are in place? Or whether a change in title even has merit? Time and time again, organizations oil the squeaky wheel and ignore their quieter, yet equally or more productive employees.

Making these types of one-off changes sets a dangerous precedent, and one that could have negative legal consequences, especially given the new Pay Equity laws. These capricious practices leave an organization open to potential lawsuits on the basis of pay discrimination and other forms of pay inequity. Intentional? Not likely; nonetheless, these unconscious behaviors may contribute to risk that is, quite frankly, very easy to mitigate.

To begin with, as business leaders, we need to be on the lookout for these types of practices and take measures to eliminate them by putting well-structured pay and hiring policies in place. It is equally important to insert necessary checks and balances into the process by creating practices that managers can easily follow and help them to understand the why around the need that brought these policies about.

If there is a need to hire someone into a lower level role, ensure your rationale is defensible and based on clearly defined policies. There is nothing wrong with hiring someone who is less skilled, but whom you see potential in, just ensure their title, responsibilities, and pay fits your compensation strategy. When employees deserve a promotion, the guidelines your organization has established will support such a deserving employee.

Having the appropriate hiring and pay policies in place will allow you to accomplish so much more than you realize. Time spent now will save you bucket-loads later. You won’t have to wonder if your organization is at any level of risk due to pay inequity. Instead, you’ll have the confidence to know you are doing things correctly and consistently. Bottom line, with a compensation strategy in place, you’ll have one less thing to worry about and be able to focus more of your mental energy on growing your business!