Take Steps to Uncover Gender Pay Inequity

Companies urged to conduct salary audits to monitor and address gender-based pay differences

By Kathy Gurchiek March 19, 2015

At the rate the pay gap between men and women has been closing in the U.S., the issue of wage inequality won’t be resolved until at least 2058, Oscar-winning actress Patricia Arquette predicted during a March 11 appearance on “The Late Show with David Letterman.”

Two weeks earlier, Arquette gave a rallying cry for wage equality for women “once and for all,” during her acceptance speech for the best supporting actress Academy Award on Feb. 22, 2015.

The American Association of University Women (AAUW) has an even gloomier outlook. Its spring 2015 report, The Simple Truth about the Gender Pay Gap, notes that while the wage gap has narrowed since the 1970s, it also hasn’t improved for nearly a decade. From 2003-13, women working full time in the U.S. have been paid 78 percent of what men are paid. At that rate, the AAUW predicted the gap won’t close for another 124 years—in 2139.

The discrepancy exists in nearly every occupation and widens as women age, according to the AAUW report, and is even wider for women of color.

A report from the Institute for Women’s Policy Research released in 2012 found that women typically earn less than men even in jobs predominately filled by women, such as social work and teaching grade school and middle school.

The AAUW recommends that companies conduct salary audits to monitor and address gender-based pay differences. Chris Cabrera, founder and CEO of Xactly Corp., headquartered in San Jose, Calif., used “big data” to do that for his company.

In 2013, the company’s data scientist team dived into nine years of empirical data the company had collected from its more than 700 customers. Its customers use Xactly Corp. software to calculate and keep track of pay and commissions for their sales forces.

“While most people are aware of the pay disparities between men and women in the workforce, until now this knowledge has been intangible, disconnected from anything we have the power to change,” Cabrera wrote in a company blog post.

In a follow-up e-mail with SHRM Online, Cabrera said that in using analytics, “even a few months of data will be sufficient. Analytics and big data technologies have become more sophisticated in their ability to give managers bite-sized pieces of information that help them paint a picture. What managers need to think about is that it’s not about asking for all the available information, but in getting to the central questions they need answered to make an informed decision.

“Even ‘small data’ can tell a big story,” he pointed out.

In its report Gender Study of Sales, Xactly Corp. discovered:

Women, on average, received a lower total variable and base pay ($126,395 vs. $151,696).

Men, on average, received a higher commission rate of pay than women (4.8 percent vs. 4.1 percent).

Women outperformed men when measured by quota attainment (70 percent vs. 67 percent).

Female-led teams had equal numbers of men and women; male-led teams tended to have a 75 percent/25 percent makeup of men and women.

Women stayed in their roles longer than men by nearly a year.

In 2014, Xactly compared itself to the findings and discovered three instances of gender pay inequity, which Cabrera said it has since rectified.

Most leaders “aren’t fully aware that they’re paying unequally; this was the case at Xactly. ... I was surprised to learn of these gaps but was happy to have the data on hand to easily correct the issues,” he wrote in his blog.

“You garner a lot of respect from the employee base when you do that,” he told SHRM Online.

Steps Employers Can Take

Pay imbalance starts early. Women are paid about 7 percent less than men as soon as they graduate from college, according to another AAUW study, Graduating to a Pay Gap, which found that a difference exists even among men and women who majored in the same field.

Those figures hit home for Cabrera, who has a daughter in college. The question, he said, is how to address gender pay inequity so it doesn’t continue.

His answer: CEOs must embrace and champion wage equity. Additionally, hiring managers must be trained to be “very aware and sensitive to this gender information” and a company must commit to regularly reviewing its own data, he said.

“Now that I know it can happen,” he added in his e-mail to SHRM Online, “it has become an opportunity for continued company education and to put checks and balances in place to help prevent it from happening again.”

The National Committee on Pay Equity notes on its website that while it’s difficult to single out one reason for the earnings gap between men and women, discrimination and unfair pay practices play a part. It recommends employers take the following steps to counter wage inequality:

Conduct a recruitment self-audit to determine if diverse applicants are being sought in the hiring process.

Evaluate the compensation system for internal equity.

Evaluate the compensation system for industry competitiveness.

Conduct a new job evaluation, if needed, to determine such things as whether consistent compensation is assigned to jobs within similar grades or scores and whether you use market rates and other external competitiveness factors consistently.

Examine the compensation system and compare job grades or scores. How does pay compare for positions with similar grades or scores within the company? Are women and minorities, on average, paid similarly to men and nonminorities within the same grade or job score?

Review data for personnel entering the company. Are men more often able to negotiate higher starting salaries than women or minorities? Do men, women and minorities entering the company get paid higher or lower than those who already hold the same positions or grades?

Assess how raises are awarded.

Evaluate employee training, development and promotion opportunities.

Implement changes where needed, maintain equity and share your success.

Kathy Gurchiek is the associate editor at HR News. Follow her @SHRMwriter.

Related SHRM Articles:

Heightened Pay Disparity Enforcement Requires Defensive Steps, SHRM Online Compensation, March 2014

Managing Pay Equity, SHRM Toolkits, April 2012


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