Pay Inequity Is Still A Thing—And It Matters

With the war for talent still raging, CEOs should be sending the message to both current and future employees that they value work fairly.

In recent years, gender pay equity has become a topical discussion amongst the global workforce. Hollywood actresses and Olympic athletes have shared their stories of unequal pay for equal work; and there has been a slew of class-action suits and corporate scandals revealing discriminatory pay practices. As a result, investors, customers, employees and the law are all calling for progress on wage equality.

Is progress being made? It’s hard to say, but it is probably nowhere near enough as is needed. Some attribute this to the “pipeline” issue. That is, men and women freely choosing entirely divergent professional paths. The theory goes that men choose careers such as investment banking and software engineering and women choose professions such as nursing and teaching whose pay rates have been set (lower) by the natural market forces of supply and demand (or perhaps because of the long history of putting less value on women’s work). But if you look at computer programmers, women used to dominate the industry, then men flowed in. The pay automatically increased and the profession was viewed as more desirable. By contrast, as women flow into historically male professions, pay actually drops.

Some companies have made attempts to address the pay equity issue, but they’re often employing outdated approaches or third-party consultants. Reliable, scalable and accessible solutions have been limited. As a result, many companies have shied away from the issue of pay equity altogether, viewing it as simply too burdensome to tackle. Such lethargy produces pay practices which only perpetuate the gender pay gap. Unfortunately, women (and other underrepresented groups) can be faced with an uphill and solitary battle on the journey to equality.

Any effort to eradicate pay disparity in the workplace must be vigorously supported by the CEO, the leadership team and the board. If a board of directors or CEO is not genuinely dedicated to such an effort, then that effort will not happen, or will eventually fail. As a CEO, why should this be top-of-mind for you and your team?

Well, at a very fundamental level, it’s the right thing to do. When companies commit to equal pay for equal work, they send a powerful message to their current employees, future hires and their customers that they stand for something that is important to all, not just women. Additionally, having a fair and transparent pay process increases satisfaction and decreases turnover. A Gartner study revealed that there is a $16 billion cost for turnover in the tech industry alone.

If your organization does not yet have a robust and ongoing strategy for achieving pay equity, here is a step-by-step guide to help you check for pay disparities and commit to resolving them:

Step 1: You can’t stick your finger in the air as a gauge of pay equity. It takes asking the right questions and conducting detailed analyses. Make sure you have enough resources and technology in place to allow you to examine your data quickly and identify unfavorable trends.

Step 2: Shift the mindset from “protect and defend” compensation data to “find and fix” any gaps. This requires you to have the courage to share the results of your analysis in Step 1, but also the discipline to resolve any anomalies.

Step 3: Companies regularly ensure they are at market, so why not make pay equity a part of ongoing compensation benchmarking? Committing to regular and frequent pay analysis is the best way for companies to ensure they stay on top of this issue.

The CEO should be the catalyst for the organization’s journey to pay equity, but other key stakeholders such as the broader leadership team, the HR function, and middle managers are also key to success. There are many ways to fully involve these groups:

• Make it personal: Research has shown that the pay gap in groups of male managers who have daughters is smaller than amongst managers without daughters. This means that when an issue is personal, behavior changes no matter the gender.

• Make it a leadership issue: If you have a gender pay gap, it is a failure of leadership. Leaders have a role and responsibility to address this. As CEO, you must communicate with HR and managers, articulate the philosophy and strategy to achieve equal pay, and make sure to constantly share metrics and progress with managers and HR, so they can share with employees and external audiences. Commit to a quantitative approach to decide how pay is determined, setting salary ranges for each role, and then make these ranges available to your employees and recruits.

• Make it inclusive: It is not solely an issue to be discussed at a women’s leadership meeting. Make it a key agenda item for your next board meeting and your executive team meetings.

A good first step to kick-start this journey is to run a pay equity analysis leveraging a trusted solution with a vetted methodology. By utilizing a data-science powered software solution, you can determine where there are unexplained pay gaps and where you may need to employ remediation tactics to preserve your company’s culture and maintain legal compliance.