August 25, 2006

Executive Summary: DCI Mini-Survey on OFCCP Compensation Standards and Guidelines

OFCCP’s new systemic compensation discrimination standards and voluntary self-evaluation guidelines will dramatically impact how federal contractors conduct pay equity analyses. The purpose of DCI’s short mini-survey was to benchmark with contractors and learn how they plan to respond to the new standards and guidelines. The survey also provided an opportunity for participants to submit anonymous feedback to the agency on their questions related to the new standards and guidelines.

 

The mini-survey results are based on a relatively small sample size; however, they provide an interesting “snapshot” into the current thinking of some major federal contractors in the U.S. One of the most revealing findings was that 70% of the survey participants still have not decided what option, whether the Compliance Coordination Incentive or the Alternative Compliance Certification, they intend to follow. And 32% of those still undecided indicate they are leaning towards neither of these options.

 

Highlights from the Mini-Survey

The following are key highlights from the DCI mini-survey. Detailed survey results are available only to companies that participated in the mini-survey. We appreciate their special efforts in submitting survey data to DCI.

 

Survey Participants

    • 27 companies representing over 6,000 locations

 

    • 81% are from industries in manufacturing-durables, aerospace and defense, transportation, business services and financial services

 

    • 81% had 2005 revenues over $1 billion

 

    • 22% had 50,000 employees and above, and 78% had 25,000 and below

Frequency of Pay Equity Analyses

    • 59% conduct some type of yearly pay equity analysis

 

    • 51% of the participants that do not conduct yearly analyses do conduct a study if there is an impending OFCCP audit or as part of the requirement to self-evaluate their compensation

Conducting Pay Equity Analyses

    • 59% of the participants’ EEO compliance functions conduct pay analyses, some with their Compensation departments

 

    • 56% of the participants’ Compliance functions conduct pay analyses, some with their EEO departments

 

    • 30% of the companies use outside statistical consultants to conduct pay analyses, some in conjunction with their Compensation or EEO compliance functions

 

    • Only 4% use an outside law firm to prepare their pay analysis

 

    • 74% of the participants conduct privileged pay equity analyses, and 90% of them coordinate the privileged analysis with their internal legal counsel

Selecting Options Under The Standards and Guidelines

    • 70% have not decided what option to select- the Compliance Coordination Incentive, the Alternative Compliance Certification, or neither

 

    • No participant selected the Compliance Coordination Incentive, and only one company said they would use the Alternative Compliance Certification

Views on the New Standards and Guidelines

    • 56% of the participants reported that running multiple regression analyses will be difficult due to limited HRIS data fields

 

    • 52% believe the new standards and guidelines will result in more protracted compliance evaluations

 

    • 33% believe the new standards and guidelines are burdensome and very costly to implement, and that creating SSEGs will be difficult without outside help

Questions and Issues for OFCCP Response

    • General: 63% of the participants had questions including how the national office and field will coordinate implementation efforts, whether enforcement efforts will be consistent, and if field staff will conduct multiple regression analyses.

 

    • Technical: 70% had questions on how OFCCP defines practical significance, and 52% want to know how to make pay adjustments that avoid reverse discrimination claims and how often OFCCP will run pooled regressions.

 

Conclusion

The results of DCI’s mini-survey indicate a high level of uncertainty in the contractor community over the best way to approach pay equity in their companies in light of the new standards and guidelines. Survey participants also have several questions regarding the new standards and guidelines from both technical and general perspectives. DCI will seek further clarification on these issues from OFCCP and provide feedback as it becomes available.

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DCI Consulting is a risk management human resources consulting firm strategically located in Washington, D.C.

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