The research from HR data specialist XpertHR found half of HR leaders (50%) lack employee self-identification data and three in five (59%) do not have data on employee demographics.
Chris Kirby, senior manager, focusing on payroll at HR consultancy Lace Partners said pay data is a critical tool for HR.
Speaking to HR magazine, he said: “Data either tells or helps tell the story of who works for you, where they are, how competitive you are as an organisation and what makes you different.
“Without pay data, you are missing the critical information to support the assessment of employee satisfaction in the organisation.”
Michael Campbell, director of employee relations platform AdviserPlus, said by having access to detailed employee relations data, organisations can identify patterns and take action.
Speaking to HR magazine, he said: “This enables them to address the root cause of issues, improve processes and align HR with the business goals, making HR a strategic and agile function.
“Pay data is particularly important as it affects employee motivation, retention and performance.”
Kirby said HR can struggle to gather data as it is often fragmented by lack of or disjointed technology.
He said: “Many organisations have too many technologies overlayed, or some lack technology at all.
“While the world is talking about AI, we are still working with organisations who walk to a filing cabinet to answer some of our questions.
“Where technology is in place, particularly in payroll, it can be spread across 10-20 different providers and systems.”
Most organisations outsource pay equity analysis to external consultants, but for those that manage it in-house, the most common tool reported by senior HR leaders is spreadsheets (59%).
Campbell said investment in HR technology is critical.
He said: “Moving beyond spreadsheets is essential for managing a modern workforce and improving productivity and efficiency across organisations.
“While spreadsheets are useful for certain tasks, they can also be limiting in terms of accuracy, scalability and collaboration.”
Only 9% of senior HR leaders said they review their data monthly, while 30% of senior HR leaders carry out audits once a year.
Campbell said regularly monitoring and evaluating data is vital to achieving pay equity.
He added: “Employers need to identify and benchmark key metrics required to make data-driven decisions.
“They should regularly evaluate performance against the benchmark to find strategies for improvement.”
Beyond collecting data insights, Kirby said HR must also be given enough authority to make definitive steps towards pay equity.
He said: “HR should have the bandwidth and the responsibility to govern processes across recruitment and onboarding.
“Too often, HR’s role in these is transactional, and you end up with decisions made locally and outside frameworks that could govern pay equity.
“HR has an important role not only in creating frameworks and governance models to identify and maintain pay equity but in having the power and focus to execute them too.”
XpertHR conducted an online survey of 1,011 HR leaders, business leaders, and employees from a mix of industries.
The survey was conducted in January 2023, with half of the participants based in the United States and half in the United Kingdom.