Making fair pay add up to a business advantage

fair pay A ‘fair pay system’ for employees is one of the critical requisites for the success of today’s business organizations. With the improving education levels of women and the increasing social acceptance of the working women in India, the workforce is becoming increasingly diverse in terms of gender participation. As a result, it has become imperative for the business organizations to include ‘fairness’ as one of the key objectives in their compensation and reward strategy.

Ineffective or unfair pay systems can undermine the cultural values of the organization and hurt the organization’s growth over a period of time. The Chartered Institute of Personnel and Development (CIPD) in Malta suggests regular “Equal Pay Audits” for business organizations that can help them achieve central business goals, and reveal the underlying causes for unexplained gaps between the men and women’s pay levels. Charles Cotton, a Reward Advisor with CIPD says, “Research shows that a diverse workforce can help to improve productivity and performance at the workplace, but if managed badly, the efforts to improve diversity can create conflict and tension in the workplace.” (1)

There are several social agencies also pushing the agenda of fair pay for all in the corporate world. In the United States, the Coalition of Labor Union Women in partnership with the National Committee on Pay Equity has declared April 28 as an “Equal Pay Day.” (2) Similarly, the European Union (EU) has also made some key interventions into the matters concerning fair pay for women and men. The clear commitment by the EU to enforceable regulation as regards the principle of equal pay between women and men has been perceived as critical to the common market objective of fair competition. (3)

One of the classic examples of how diversity in the workforce and fairness of pay can create a global competitive advantage for an organization is that of the South African Breweries (SAB) Group - one of the world’s largest beer distributors. This 49,000-employee, multidivisional company operates in 19 countries around the world, and is at the forefront in addressing social inequities in its hiring, promoting and training practices and combating discrimination. (4)

The large business organizations in India, particularly in the services sector, are also gradually becoming conscious of the importance of fair pay to ensure high employee motivation level within the organization. However, India still has a long way to go in implementing the goals of fair pay for all at a wider level. A World Economic Forum (WEF) study measuring gender equality around the world places India 113th among 130 countries. In terms of economic participation and opportunity, India ranks at 125th place. (5) Undoubtedly, the average Indian business organization still needs to be educated about the business advantages of a diverse workforce and a fair pay for all.


- Vikas Vij (views expressed in the article are that of the author)


(1) Foundation for Human Resource Development ( and

(2) Coalition of Labor Union Women


(4) Human Resource Management International Digest, 2002, Volume 10, Issue 5, Page 14-17.



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