What Does Equity Mean In The Workplace And How To Improve It?

Context is everything when it comes to certain words in business. Their meaning can change dramatically depending on who you ask. What does equity mean? For someone in accounting, equity refers to ownership interest or something of financial value. Others think that equity is just another word for equality. But in reality, the concept of equity in HR is something different altogether. This article will explore the basics of equity and the ways in which leaders can promote it in their organisations.

What does equity mean in HR?

Equity and equality are related but distinct concepts in theories of fairness and justice. Equality is all about giving the same treatment to everyone, without discrimination or bias. It is based on the (often inaccurate) assumption that fairness means creating a level playing field for everyone, regardless of their individual circumstances.

Conversely, equity is based on the belief that individuals are NOT equal in reality. People are born under different circumstances, have different needs, and face different kinds of disadvantages. The playing field is not level to begin with. Instead, you have to create the optimal conditions by providing each individual (or group of individuals) with support that helps them overcome their disadvantages.

Take the example of employee parking and building access. Equality would mean providing a car park without any reserved slots, and a single entrance with stairs to access the office building. But what if your staff includes persons with disabilities? Equal treatment would leave them at a severe disadvantage in this situation.

Equity would involve keeping reserved parking spots close to the office entrance for such employees. And along with stairs, you will also provide wheelchair-friendly ramps and lifts to ensure that all employees can reach their workplace without any difficulties. Similarly, equitable policies can be used as part of your organisation’s DEIB+ strategy to combat workplace inequalities based on factors like gender, sexual orientation, age, race and religion.

Why equity is important in Australian workplaces

Despite increasing awareness of equity in the workplace, the Australian HR Institute’s 2023 Diversity, Equity and Inclusion (DEI) Report shows a clear gap between employer awareness, intent and action.

Although 80% of HR professionals view DEI as critical to their future success, only 50% say that their leaders see DEI as a priority, while 49% say that their organisation is not placing enough focus on DEI.

The Report also finds that the focus of DEI activity in Australian workplaces tends to be on gender, which, although a positive result, means there is less focus on Aboriginal and Torres Strait Islander peoples, as well as other underrepresented groups, including people living with disability, people who are LGBTQIA+ and those from a lower socio-economic background. The widespread perception among Australian HR professionals is that many groups are under-represented in their own organisations.

Five ways leaders can improve equity in the workplace

The path to an inclusive and equitable workplace starts at the top of an organisation. According to the Harvard Business Review (HBR), the impact of a capable leader with the right mix of qualities on workplace DEI initiatives can be as high as 75%. The HBR article identifies humility, commitment and empathetic leadership as the essential qualities.

1. Actively seek feedback from diverse employees

Managers often fall into the common trap of surrounding themselves with subordinates and advisors who share similar traits, backgrounds or interests. This kind of similarity bias can make you blind to issues of exclusion and discrimination in the workplace.

To avoid this, leaders will need to actively try to create advisory teams that accurately reflect the diversity in the workplace. This will give the leader access to new perspectives and insights into the workplace conditions of employees from different backgrounds.

2. Conduct equity reviews across the employee life cycle

Individuals routinely face bias and discrimination throughout the various stages of their employment. Sometimes, it starts at the interview stage, with a recruiter making certain assumptions or asking insensitive questions. Or it can manifest itself in the later stages, during annual reviews or promotions.

To make a positive impact, a leader needs to conduct a thorough review of how an employee experiences equity (or lack of it) throughout their tenure at the company. If there is a clear sign of bias, take corrective measures such as unconscious bias training programs.

3. Recruit for equity in the workforce and management 

According to Gartner’s HR 2020 Survey, 88% of organisations have issues in promoting DEI at the C-Suite. Due to poor succession planning and inherent bias during promotions, businesses often end up with a homogeneous leadership pipeline. This could have long-term negative impact on any equity initiatives.

To avoid this, leaders should focus more on creating a more diverse workforce through better recruitment policies. Employer branding can play a decisive role in attracting candidates from minority groups and communities to your organisation.

4. Take decisive action to remove any pay gaps

Gender pay gaps exist even in the most developed economies. For instance, although Australia’s gender pay gap fell to 13.3% in 2023, women continue to earn just 87 cents for every dollar of their male counterparts, with the divide barely improving in recent years.   

As long as such inequalities exist, equity and inclusion will remain elusive for your organisation. Improved transparency about pay scales and promotions can go a long way in improving employee morale and trust in the leadership. 

5. Use appropriate metrics to track and analyse DEI initiatives

Tracking the DEI values in an organisation is hard, but not impossible. Pay equity, diversity in senior management levels, workplace physical accessibility, employee resource group (ERG) participation, employee demographics, candidate demographics, and employee promotion rates are all highly useful metrics.

Meticulous data tracking and analysis is essential to ensure the long-term success of your attempt to improve workplace equity in your organisation. Apart from business-wide analysis, you can also go into granular detail and focus on the impact of specific DEI pilot projects.