Pay equity and transparency on the rise in Asia amid regulatory updates
As North America and Europe continue to solidify their pay transparency practices in response to increasing legislative demands, a similar movement is gaining traction across Asia, according to Aon’s latest Asia Pay Equity survey.
Apart from Japan and Australia, most Asian countries lack specific mandates for pay disclosure. However, with expectations of impending legislation in key markets such as Mainland China and Hong Kong, India, and Singapore, companies are proactively adjusting their policies.
Nearly 4 in 5 respondents (79%) recognise the importance of pay transparency, although only 25% of organisations have voluntarily shared pay-related information with their employees.
Drivers of pay transparency in Asia
The primary motivators driving this trend include regulatory compliance, cited by 72% of companies, followed by diversity, equity, inclusion, and belonging (DEIB) policies at 58%, and peer practices influencing 38%.
Publicly listed companies are notably more advanced in adopting transparency measures than privately held firms: 86% of public entities are implementing some level of pay transparency, in contrast to 74% of private organisations.
This discrepancy highlights the greater scrutiny and expectations placed on publicly traded companies by regulators and stakeholders.
“Globally, pay transparency regulations and directives are being introduced with the aim of closing the pay gap more quickly – through legislation, rigour and enforcement,” said Peter Zhang, partner and head of Talent Solutions for Aon in Asia Pacific.
“Although it is still nascent, trends in pay transparency show that regulations will catch up in the region and most organisations may have to disclose some information about pay transparency.”
Zhang further noted that forward-thinking companies in Asia are not merely waiting for these regulations but are actively shaping their pay transparency strategies.
“While embarking on this journey, they are deciding on the degree and extent of pay transparency based on drivers such as their DEIB policy, peer practices, local market requirements and practices of their global headquarters.”
This proactive approach among Asian companies signals a significant shift towards greater corporate transparency, driven by regulatory expectations and a commitment to fostering more equitable workplace environments.
Challenges and strategies for implementing pay equity
Meanwhile, more organisations are proactively analysing and adjusting their compensation structures to address pay equity. Impending regulatory changes and a maturing sense of corporate responsibility across various sectors are prompting this shift.
According to the Aon survey, 62% of organisations now conduct a pay equity analysis, with 65% having a defined implementation strategy.
Notably, this practice is more prevalent among publicly listed companies, where 75% report conducting pay analyses, compared to an even 50% split among private firms.
The findings also highlighted that job family rating, performance, and experience are the top factors considered in these analyses, indicating a structured approach to tackling pay discrepancies.
Yet, despite the widespread conduct of these analyses, communication about the results remains limited mostly to top management, with far fewer organisations sharing the findings with their entire workforce or board of directors.
“Organisations that have started to conduct pay equity analyses have also begun to articulate their remediation or pay equity implementation strategy. This trend is seen across the region, regardless of the organisation's size or type,” said Maggie You, Partner and Head of People Advisory and Analytics at Talent Solutions for Aon in Asia Pacific.
Developing a strategy based on pay equity analysis
Organisations are advised to develop a pay equity implementation strategy that begins with a thorough analysis to detect any discrepancies in compensation. This process ensures that employees performing similar work are paid equitably, irrespective of gender, race, or other potentially discriminatory factors. Identifying and correcting these discrepancies is vital for legal compliance and promoting fairness within the workplace.
A robust job architecture
The effectiveness of a pay equity analysis heavily relies on a well-defined job architecture. This structure should be underpinned by an analytical job evaluation methodology, which assesses and categorises jobs based on their roles, responsibilities, and value to the organisation. A systematic and analytical approach ensures that the comparisons made during the pay equity analysis are accurate and meaningful.
The role of top management
The expansion of pay equity and pay transparency efforts helps in achieving compliance and fairness and significantly impacts an organisation's reputation or employer brand. Top management must understand how these efforts can enhance employee engagement and make the company more attractive to potential and current employees. Leadership's commitment is crucial in driving these initiatives forward and integrating them into the broader organisational culture.
The frequency and timing of pay equity analysis: For organisations with mature HR functions, it is common to conduct a pay equity analysis annually, often aligned with
Challenges persist, however. Budget constraints are the most significant hurdle, reported by 38% of organisations, followed by the lack of knowledge about peer practices and unconscious biases among managers. These factors contribute to the complexity of implementing effective pay equity strategies.
You further noted that organisations with mature HR practices typically conduct these analyses annually, often aligning them with salary review cycles.
The evolving focus on pay equity aims to rectify historical inequalities and serves as a strategic advantage for companies looking to enhance their employer brand and attract top talent.
Transparent communication and informed leadership become increasingly crucial in fostering a fair and inclusive workplace culture.