Compensation Regression Line Reality

Recently, Jim Higgins, Ed.D. and Patrick M Nooren, Ph.D. with Biddle Consulting Group, Inc. released an article in the EEO Insight publication title, “OFCCP’s Compensation Directive 307: A Practical Review of How Federal Contractors Should Prepare for the OFCCP’s New Compensation Directive”. Drs. Higgins and Nooren mention in this article that the OFCCP is under growing pressure to identify and address systemic compensation systems/decisions that generate or perpetuate pay equity discrimination. Since the OFCCP has increased its budget and staff by 25% and 31% respectfully since 2009, the Obama Administration is expecting an increase in compensation audits, pay equity discrimination investigations and corresponding awards and penalties associated with systemic compensation issues. The authors state at the beginning of this timely document, “THE HEAT IS ON!”

Drs. Higgins and Nooren did a nice job with setting the stage for why organizations need to take a proactive approach with identifying and addressing problem compensation equity issues within their respective organizations. As stated in the article, the authors recommend several recommendations that I would like to share as a bulleted reference. For additional detail on these recommendations, please search for the Biddle Consulting Group via the web and obtain a copy of their article.

Some of the proactive recommendations in preparing for the OFCCP’s new compensation directive as presented in the article written by Drs. Higgins and Nooren follow:

  • Document! Document! Document! and Review Your Compensation System(s)
  • Conduct Proactive Statistical Analyses and Qualitative Analysis
  • Use of compensable factors to group “similarly situated” jobs/positions

The authors mention that organizations need to evaluate the linkage between job classification systems and compensation systems, conduct a comprehensive compensation study to proactively manage similar and dissimilar positions and utilize pay regression line analysis for proactive pay equity analyses.

We agree with the authors and we have been advocates for the multi-compensable factors job evaluation and compensation systems for the past 28 years. Our proprietary 15 factors job evaluation system with weighted points by selected levels has developed thousands of job descriptions and job values since 1985. Our clients are able to evaluate and collaborate on similar and dissimilar jobs with the computerized position analysis questionnaire which is internally aligned with the job valuing system. This system automates the internal pay line regression configuration and analysis of pay equity by race, gender and age. Our DBCompensation software clients have saved precious HR hours when completing their internal and external compensation studies with the use of this proven human resources and compensation management tool. Some of the large compensation software companies state that they offer salary range development, equity analysis and pay program design, but the reality is that they do not utilize a compensable factors job evaluation process so the regression line and positions differentiator is based on large EEO classification groupings – and an OFCCP investigator would love to work with these large “Pay Analysis Groupings”. We believe that these generic classifications instead of a true compensable factors job evaluation classification system generate regression pay lines that provide a false sense of reality and pay equity.