ProvenSolution

1 | Proven Solution | Schneider Electric

Economic JusticeSchneider ElectricChampioning equalpay for equal work2 | Proven Solution | Schneider Electric

Economic Justice

Global Context
In 2020, the World Economic Forum estimatedthat without substantive change it would take
257 years to close the gender pay gap. In 2018,
the International Labor Organization found that,on average, only a relatively small share of thegender pay gap could be explained by differencesin education and other labor market attributes
between men and women – the largest share of
the gender pay gap remaining “unexplained”.

To tackle this issue, several countries havein recent years passed proactive pay equity
laws. Companies have also been seeking
ways to address gender pay gaps within theirown organizations.
Along with others, Schneider Electric has
been at the forefront of these efforts.
Early in our Diversity, Equity & Inclusion(DEI) journey, we identified pay equity as anecessary condition for gender equality andinclusion in the workplace. Ensuring that

all employees are rewarded fairly became a
top priority for us. As a result, our pay equitystrategy over the last five years has been
truly transformational, and today over 99%
of our employees across the 100+ countries
where we operate are covered by our global
pay equity review framework.

“At Schneider Electric, we believe in theprinciples of fairness, equity, ethics andtransparency. We compensate our employees
fairly and equitably for their skillsets throughour reward policies and processes. Overthe past five years, we have taken proactive
actions to not only close existing gender pay
gaps, but to prevent gaps from being createdin the first place. Equal pay for equal work
has become an integral part of how we atSchneider Electric drive gender equality.”
Jean Pascal Tricoire, CEOOver the past five years, wehave taken proactive actions
to not only close existing
gender pay gaps, but toprevent gaps from being
created in the first place.
Jean Pascal Tricoire, CEO

3 | Proven Solution | Schneider Electric

Economic Justice

Key Stages ofImplementation

Pay equity was added to the Schneider
Sustainability Impact metric, which defines
and annually captures 21 global key
performance indicators (KPIs) linked toemployees’ short-term incentive plans. We
set a 2020 goal of having 95% of employees
working in a country with a commitment
to, and process for, achieving gender payequity.

From the start, we decided that the principleof equal pay for equal work would be at thecore of our compensation philosophy, withthe aim of promoting fairness, consistency
and greater transparency across our rewardprograms. “Equal pay for equal work” atSchneider Electric was defined as rewarding
everyone for the skillset they possess, andvaluing their contribution on an equal basis.

The active sponsorship of the CEO andcountry presidents, along with the creationof an accountability framework, created asound foundation for success.

Communicating this vision to all stakeholders
involved in deploying the action plan, andensuring that everyone was comfortablewith the definitions used, was key to a
successful implementation. To facilitate
the understanding of these concepts, our
DEI and Reward teams produced various
educational materials, including e-Learning
modules and white papers. The goal wasto help managers and HR employees
understand the ways in which gender biases
can influence compensation decisions andequip them with tools to take informed andequitable pay decisions.

Step 2 Education andcapacity-building

Step 1 Executive Commitment
and accountability
Achieving pay equity requires leadershipbuy-in and transparency. Make anambitious commitment at the leadershiplevel, actively sponsor an action plan
to meet this commitment, and ensureaccountability through reporting.
We started our pay equity journey from thetop with a 2014 working group sponsored by
our CEO and country presidents. The group
designed an initiative that was piloted in 12
countries and our global Pay equity initiative
was officially launched across 16 countries
in 2015.

Pay equity is a complex and ever-evolving
concept: have a clear vision, adopt
definitions that are simple to understand,and ensure all stakeholders are comfortableusing them.

The active sponsorshipof the CEO and country
presidents, along withthe creation of an
accountability framework,
created a soundfoundation for success.

pay gaps identified. In 2018, we integrated
the pay equity adjustment process in ourannual salary review process, leveraging our
Human Resource Information System (HRIS)
to assist in closing the identified pay gaps.
Automatic analytics and reporting
All our pay equity analytics and reports wereautomated through the HRIS platform. This
resulted in greater accuracy and tracking of
data, and allowed for an easy integration of
the pay equity adjustment process into theannual global salary review.

Step 3 Local implementation of
global approach
Build one common, global approach toaddress gender pay gaps. Empower local HR
to implement it in a way that is tailored to
the local context.
Once goals were clearly defined, the next
step for us was implementation. For amultinational of our size, it was clear that thedeployment of the initiative would have to beadapted to different market requirements.
At the same time, it was important to ensurethat implementation was consistent acrossgeographies, which is why we created a
global pay equity framework.
Clear methodology and integrated process
A clear, consistent global methodology wasdefined and applied to identify potential
unjustified pay gaps. The pay gap wasdefined as the salary difference between
a certain individual and the median salaryof the same job family and level of theiropposite gender. Actions were thenprioritized to focus on the largest individual

Stakeholder education
A cohesive communication and education
program was deployed to support the pay
equity framework global roll-out. The goal
was to ensure complete understanding of
the role that managers and Human Resource
business partners had to play, along withthe use of appropriate tools to achieve theobjectives.
Robust governance structure
Ongoing oversight is key to sustaining
an initiative of this size. To ensureaccountability and transparency, we conduct
quarterly reviews of compensation gaps
and actions, both at country and globallevel, leveraging analysis from our HRIS
platform, which covers all key drivers of theemployee lifecycle from hiring, performanceassessment, and salary adjustment to career
moves.
This dual global and local approach was key
for a fast adoption. In 2015, our global pay
equity initiative was officially launched in 16
countries, and by the end of 2018 it covered
all the 100+ countries in which we operate.

4 | Proven Solution | Schneider Electric

Economic JusticeConclusion
Resources

Our approach to the topic of pay equityhas driven greater levels of clarity
and transparency through our reward
philosophy, pay equity framework andtools. Moving forward, we will broaden ourambition to look beyond gender, and wehave committed to lowering – and thenmaintaining – the pay gap below 1% for all
employees by 2025.

Create a fair and equitable ecosystem ofHR processes and take proactive actions toprevent new pay gaps from being created.

Global Pay Equity Framework
Sustainable HR Ecosystem Framework

Talent Management

Focus on the entire ecosystem with a defined process andgovernance supported by standard reporting and analytics

Contact
Sonali Satpathy – Vice President Diversity, Equity,Inclusion and Well-being
Sonali.Satpathy@se.com

on

Promote women at
an equitable pay
compared to theirmale counterparts

NHire

We closely monitor salary changes whenhiring new recruits, promoting employees
and reviewing salaries internally. Managers
and HR professionals are trained to be
mindful of every pay decision they make,and to ensure that their decision process
is bias-free.

Rewardew

Pay equity is a moving target. In anycompany, pay decisions are constantly being
made when hiring, promoting and assessing
talents. This can create new pay gaps.
Recognizing this, we have shifted to a moreproactive approach to pay equity, which aims
to prevent new gaps from appearing.

Talent Acquisition

Promoti

Step 4 Sustainable Framework

Fair Pay Decisions White Paper

Pay equitySal
ary review

Provide salary adjustments
in line with performance

Hire women at
an equitable pay
compared to theirmale counterparts

Lipika Verma – Vice President, Rewards & Performance
Innovation & Thought Leadership
Lipika.Verma@se.com