Talent Risk Assessor, 6: Pay Analysis Tools for Assessing Risk and Building a Defense



In episode six of the Talent Risk Assessor series of Defensible Decisions, Scott Kelly (Birmingham/Washington) and Cam Ellis (Atlanta) are again joined by Pete Bell of the firm’s data analytics team to examine how compensation data can be analyzed for potential pay disparities. Building on the performance rating patterns discussed in episode five, the speakers walk through a layered approach, starting with average pay comparisons among similarly situated employees, moving to a review of outliers on a scatterplot based on tenure and time in role, and then, finally to statistical significance testing. The discussion continues with consideration for factors such as prior experience, education, and geographic differentials that may act to explain observed differences. The episode emphasizes that this work must be conducted under attorney-client privilege, and the need for analysis refresh given expected employment movements, and that a more robust, regression-based analysis should be considered where flags remain.