Pay the Job Not The Gender (or the person for that matter)
It’s hard to believe but 48 years have passed since the Equal Pay Act of 1963 was passed, officially ending the legal disparate compensation between men and women for similar jobs. If only it were so simple to sign a bill into law and correct decades of behavior overnight. The fact is that 48 years later the gender earnings gap still has yet to be fully closed. As recent as 2008, unmarried women earned 94.2% of what their unmarried male colleagues earned. Overall, women on average earned 79.9% of what men earned in 2008.
The problem that I have with statistics is that they can distort reality. Anyone who has pain attention to a presidential election knows that you can make data support even the most extreme position on something by simply altering the lens by which you analyze. For every data point thrown out by a candidate, their opponent can throw out a counterpoint supported by data (often from the same dataset) to refute the original point.
Given the fact that numbers can lie, how can one make sure that the gender pay gap is as substantial as it is portrayed? Just talk to people. Look at data within your organization for similar roles, compare pay by job code by gender both at an aggregate level and at an individual level. Do you see any patterns? Any biases (intentional or not)? I’m sure its hard to imagine that this is an issue within your organization – this only happens other places, right? WRONG!
Earlier in my career I actually was a HR practitioner who worked in the compensation function of an organization. Given that we were one of the city’s better known employers, progressive, and skewed towards a female workforce you would expect that our pay practices supported pay equality or even a positive bias towards women. Unfortunately after some in-depth analysis and major MS Excel & Access data-crunching I noticed that the perception didn’t match reality.
Needless to say that I was very surprised. Its hard to believe that an organization like ours knowingly engaged in pay practices which were the exact opposite of everything I know to be right. Was this part of a sinister plot? Was this a conscientious direction the company chose to take? The answer ended up being yes and no. While pay practices were designed to be gender neutral, there were some very specific aspects of the culture which impacted the ability to remain gender neutral.
- We were a very paternalistic organization – Our company culture had long been one based on taking care of our employees. As a result of this there was a fair number of managers who made decisions related to compensation and promotions, etc based on not only individual performance and contributions but also based on key life events. Got married? There might be an off-cycle raise or a larger merit in your future. Had a baby? Diapers cost money, so let’s make sure your incentive payout is able to help out.
- While we were a female-heavy population, the women in the organization tended to be younger than the men. Women occupied larger percentages of the more junior roles than the senior roles (with almost no presence in the executive team). It wasn’t because the organization didn’t promote women, but rather women who started out on a career track moved into a mommy track at a rate that was higher than some other industries resulting in a larger percentage of more senior roles being occupied by men.
- Our highest paying individual contributor roles were in occupations which historically were dominated by men. As a result, the pay bias in these roles did get skewed
Regardless of the reasons for why this happened, it did. Since then I’ve been much more aware of the issue and have more vocally advocated for pay practices which encourage organizations to pay the job not the person. By consistently paying the job you can remove many of the factors that contribute to unintentional (or intentional) pay biases. How can this be put into practice:
1. For your highest volume positions publish standardized guidelines for compensation which managers and recruiters can use to have a discussion around before an offer is extended. e.g. Staff accountants are consistently paid at $37,500 per year. Anything that deviates from that requires compensation review.
2. Avoid counter-offers whenever possible. Employees who obtain offers elsewhere will eventually leave you anyway even if you do counter offer. More importantly, yet highly unscientific, my personal experiences show that men use this approach to obtaining a raise more so that women. Where I have tracked this information the male/female ratio of increases due to counter offers was 3:1.
3. Be sure to consider both internal and external equity when considering a manager’s request for a salary adjustment. If an adjustment is requested to an employee’s compensation, determine whether its a performance-related increase or something else. If performance, determine if a promotion is more appropriate than simply paying more for the same job.
It seems like common sense, but inequities occur on a daily basis. What are your thought on the topic and your experiences?