Outliers

Outliers on the Paygap platform are identified using the compa ratio, a widely recognized metric for evaluating pay equity. This ratio compares an individual's salary to the median salary within a defined reference group (e.g., by gender or role). For PayGap, the defined reference group is comparable jobs, as defined by the grouping of jobs that are determined to hold equal value.

Compa Ratio Calculation:

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• Employee Salary: The individual’s actual pay.
• Median Salary of Reference Group: The midpoint salary for comparable employees, such as all males or females in similar roles.

Outlier Thresholds:

• Employees are flagged as outliers if their compa ratio falls below 80% (< 0.8) or above 120% (> 1.2) of the median.
• Customers can customize this range (e.g., 70%-130%) to align with their organizational norms or industry-specific factors.

Why Identifying Outliers Matters

Detecting pay outliers is crucial for promoting fairness and compliance. Significant deviations from the median salary may indicate potential risks, such as:

• Systemic Bias or Discrimination: Outliers could reflect unintentional pay disparities that undermine diversity and inclusion goals.
• Compliance Risks: Large deviations might signal regulatory violations, especially under laws like the European Directive 2023/970, which mandates pay transparency and equity.
• Operational Challenges: Salary anomalies complicate benchmarking efforts, making fair and accurate pay adjustments more difficult.
• Workforce Morale: Underpaid employees may feel undervalued, leading to low morale or attrition, while overpaid salaries could indicate role misclassification or inequity.

By addressing outliers, organizations not only comply with pay equity regulations but also build trust, enhance transparency, and support equitable workplace practices.

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