Equal pay for equal work by people of different genders is top of mind for most companies in 2019, with a December World Economic Forum report noting the gender pay gap is on track to persist for the next twenty decades.
There is absolutely no
reason for the pay gap to persist, and some actors have begun taking steps on
what they have realized is a solvable problem. For example, many states are
enacting laws that require organizations of all sizes to close the gender pay
gap. Shareholder activists, third-party organizations, and activist fund
managers are pressing companies for transparency on their pay equity to avoid
facing a shareholder proposal. Within companies, employee networks are more
frequently sharing their own pay information when pressing their employers on
But more than the legal
requirements or external and internal pressure, gender-based pay equity is the
right thing to do. When employees know a company takes pay practices seriously,
they are more engaged, happier, more productive, and less likely to leave. Employers
that are transparent about their commitment to pay equity earn trust, and a
reputation for pay equity is also the number-one way to attract top talent.
The current solutions
for addressing pay disparities between men and women may actually be
perpetuating the problem. Employers wisely choosing to address pay equity are
often left thinking that fixing the problems is an expensive, complex, and time-consuming
task that may not be worth the investment because—year after year—they must
hire legions of lawyers, experts, or consultants with advanced degrees to
find pay gaps. The industry has conditioned employers to believe the process is
fraught with peril.
Because these costs appear
to be so prohibitive, the industry recommends a “one-and-done” model in which companies
pay for this massive undertaking once a year. The truth is the “one-and-done”
model exists because few companies can afford to do it more than once a year,
or want to endure the process more than once.
What’s worse, one-and-done
reviews don’t sufficiently address the root causes of disparities in pay
between genders. They are forever behind—rather than ahead of—risk. The old
model looks backward, helping companies explain and maintain differences to
assure leaders that while differences exist, they are explainable and won’t
lead to lawsuits. Remedial action, or “catch-up” payments made to underpaid
women annually, is tantamount to fixing symptoms each year but never addressing
the underlying problems.
“one and done” actually worked, by definition, we would be “done.” And yet the
So, how do you know
whether your company is engaged in meaningful pay analyses and committed to
eradicating pay disparities between workers of different genders? We’ve
compiled several questions to ask, which will enable you and your board
colleagues to understand more deeply whether your company has seriously and
genuinely addressed pay equity.
Seven Qestions Every Board
Member Concerned About Pay Equity Sholud Ask:
- Did the company conduct a pay equity analysis this year? If not, is that because pay fairness is not a priority? Is it not prioritized due to fear of finding a problem, or some other reason? Is that reason acceptable?
- What were the results, and can you show me those results in a clear and dynamic dashboard?
- How long did the process take, and at what cost?
- Are the results presented in a way that is usable for you to take action?
- If compensation changes were made as a result, what did you learn about the underlying problems that led to the disparities? What policy or behavioral changes will be made?
- Are all compensation events analyzed? This includes base pay, new hire starting pay, stock grants, mid-year changes, bonuses, reorgs, or re-leveling exercises and the like.
- Does the company analyze pay during the pay-setting cycle so that changes can be made before pay is finalized? And does the company monitor pay equity throughout the year?
Once you have the
answers to these questions, you will be able to assess risk and evaluate the
company’s commitment to pay equity. Most companies engage in ongoing changes in
the employee lifecycle, including hiring, setting pay, promotions, terminations
and turnover, and reorganizations. Companies not analyzing pay equity, or doing
it just once per year, are incurring unnecessary risk—and doing so at a time
when third parties are becoming dramatically more sophisticated in pressing
companies to demonstrate gender pay equity results.
One of the most
important elements of employee satisfaction and engagement is fair pay. A
company genuinely committed to pay equity is not only doing the right thing. It
also has an incredible opportunity for brand marketing and public relations, as
well as a differentiator for recruiting top talent.
If you’d like to talk more about an ongoing or new pay equity initiative at your organization, get started in the comment section below.
Zev Eigen is the founder and chief data scientist at Syndio. Eigen speaks on the topic of pay equity at regional NACD events, most recently at the Colorado Chapter meeting in December 2018.