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HR has an unprecedented opportunity to ensure that women are well-represented in their organizations and paid fairly.
In many ways, it has been a watershed year for women, both on the world’s stage and in the workplace. Not only did Hillary Clinton become the first female U.S. presidential nominee, but working women were also a high legislative priority and a top focus in the war for talent.
California and New York enacted pay equity laws in January, for example, and in August Massachusetts became the first state to legislate an outright ban on asking job candidates about their salary histories, a practice believed to perpetuate discrepancies in compensation. At the federal level, the U.S. Equal Employment Opportunity Commission proposed in July that employers with 100 or more workers submit salary data along with their EEO-1 reports starting in 2018 in an effort to better address pay inequality.
Meanwhile, after Netflix, Microsoft and other tech giants led the way in offering paid parental leave last year, more companies have followed suit, including soup maker Campbell’s and online purveyor Etsy, which rolled out an astounding 26 weeks of paid time off for new moms and dads earlier this year. More than half of employers also now offer flexible work options such as telecommuting and flextime, according to the Society for Human Resource Management’s 2016 Employee Benefits research report.
And yet …
“Men still run the world—and it’s not going that well,” said Facebook COO Sheryl Sandberg before a packed room of world leaders at the World Economic Forum in Davos, Switzerland, earlier this year. While Sandberg’s assessment of the state of the world is debatable, a spate of recent surveys and reports make clear that men and women still aren’t equally represented in the workplace, particularly at the senior leadership level.
In fact, at the current rate of progress, it will take more than 100 years to achieve gender parity at the C-suite level, according to a report from McKinsey & Co. and LeanIn.org. And Mercer’s 2016 When Women Thrive report, which analyzed data from 42 countries, found that women are underrepresented on all rungs of the corporate ladder, making up roughly 20 percent of executives. Moreover, merely 1 percent of board members of Fortune 1000 companies are women, according to a new report from 2020 Women on Boards.
‘If HR isn’t committed to gender diversity and isn’t championing it, the needle won’t move.’Ursula Mead, InHerSight
While the underlying issues are daunting and complex, human resource professionals are in a unique position to effect change. Not only are HR leaders in charge of their organizations’ recruiting, diversity and compensation efforts, but the profession itself is dominated by women. The U.S. Bureau of Labor Statistics (BLS) estimates that almost 80 percent of HR managers are women, as are 49 percent of HR officers at the top 100 U.S. corporations. (However, there is ample room for improvement in terms of pay equality, with male HR managers earning 40 percent more than their female counterparts, on average, according to the BLS.)
“People working at companies often see HR as the key agents of change when there’s a problem like a lack of women in leadership,” says Ursula Mead, CEO and founder of InHerSight, a website that allows users to rate how female-friendly companies are. “So if HR isn’t committed to gender diversity and isn’t championing it, the needle won’t move.”
At its roots, the issue often comes back to culture, says Barry Coleman, a former HR manager at The Washington Post Co. who now runs his own HR training consultancy, bcole group LLC. Although companies have made progress toward becoming more diverse and inclusive, most still operate in environments where the default is to value women’s contributions less than men’s, he says.
And that is where HR can make an impact. “HR needs to be a part of each step in the employee life cycle,” Coleman says. “I think HR needs to have the authentic conversations with company leaders around the numbers. They need to say, ‘This is what they look like. They are upside down. What are you going to do about it?’ and then help the leaders get there.”
A report released in April by the Joint Economic Committee of the United States Congress’ Democratic Staff, titled Gender Pay Inequality: Consequences for Women, Families and the Economy, found that women in 2016 earn only 79 cents for every dollar men earn. Black and Latina women see the biggest discrepancy, bringing in 60 cents and 55 cents, respectively, for every dollar earned by white men.
Women’s median incomes are lower at every level of education as well. A woman with a graduate degree typically earns $5,000 less annually than a man with a bachelor’s, the report found. Even when research accounts for factors known to influence differential pay between the genders, such as women being more likely to take time off to raise children or gravitating toward lower-paying fields, as much as 40 percent of the gap can’t be explained.
That’s a concern, given that the U.S. Equal Pay Act of 1963 requires that men and women in the same workplace be given equal pay for equal work. While inequalities have persisted for years, recent state and federal legislation has been more focused on addressing them. And it has fallen to employers—and HR specifically—to be proactive about ensuring that compensation is fair, such as by conducting pay analyses.
[SHRM members only resource: Salary Survey Directory.]
If those analyses reveal that a woman with the same abilities earns less than a man in an equal position and at the same company, bias exists, whether it is conscious or subconscious, says Rick Devine, CEO and founder of TalentSky, a professional skills network. Inequities remain in place because there is currently no universal method of quantifying candidates’ and employees’ work capabilities across the professional landscape, he adds, leaving companies to rely on a legacy mindset that perpetuates disparity.
That may change in the age of “big data,” especially as companies face increasing public and private pressures to report on salary equity in shareholder meetings and public filings. Devine advises HR to invest in analytics software tools or other systems that could provide objective data about employee skill sets. Doing so gives companies the best insight into a candidate’s core abilities while eliminating subconscious biases.
$4.3T Amount the U.S. could add to its annual GDP by 2025 if women were to attain full gender equality in the workplace.Source: McKinsey Global Institute.
“The question we have to answer better is, ‘Does this person have the ability to do the work?’ ” he says. “The faster we have tools in place to answer this objectively, the faster we get an equal scorecard and the faster we can reach pay equality.”
Currently, 35 percent of companies deploy processes to ensure pay equity and capture employees’ experience and skills, according to Mercer’s When Women Thrive report.
Perhaps surprisingly, the U.S. military is a leader in this area: All branches of the armed forces rely on a battery of standardized assessments of female and male service members as the main basis for hiring and promotion decisions.
“The military gives us a good example of how to eliminate [bias] from the decision-making process as a whole,” Devine says. “Human resources should demand a consistent method for rating, ranking and qualifying talent. This kind of system would democratize employment by exposing any management bias.”
HR is naturally positioned to take the lead. “Human resources has all the data and can see the big picture,” says Katie Donovan, founder and equal pay consultant for Equal Pay Negotiations LLC. According to a Harris Poll conducted for CareerBuilder in February, 20 percent of HR professionals are aware that there is a gender pay gap in their own companies.
“They are probably aware of the problem long before anyone else,” Donovan says. “They can’t solve [it] alone, but they can lead, inspire, advocate … and push back when managers are about to put the organization at risk with questionable compensation decisions.”
[Members only resource: Embracing a Myth--Most Workers Say There's No Gender Pay Gap]
Unintentional name bias starts the moment a woman submits an application or resume, according to Donovan. One way around it is for companies to use a human resource management system or applicant tracking system that incorporates a blind candidate view so that recruiters and hiring managers can do a first cut without accessing applicants’ identifying information. HR can also rely on tech tools such as Textio, which helps employers create gender-neutral job descriptions.
In addition, she advocates that HR move away from the common practice of requiring job candidates to provide salary history as part of the application process, since women are more likely to be coming into a new position with lower previous compensation than their male counterparts.
Another often-overlooked piece of the pay puzzle may have to do with the negotiating process. While conventional wisdom holds that women are less skilled negotiators than men, in reality women may face unfair obstacles the minute the salary discussion begins, Donovan says.
According to a 2014 study in the journal Organizational Behavior and Human Decision Processes, for example, both men and women admitted to being more likely to lie to women than to men during a series of mock real estate negotiations.
“This means women need to successfully overcome more roadblocks in the negotiation to get higher pay,” Donovan says.
A practice that really peeves her, she says, is when companies incentivize recruiters and HR professionals with bonuses based on the savings they bring to their companies through the payroll amounts of their new hires. “Personally, I find it distasteful that employers pit one employee’s paycheck against another’s,” she explains, “so the woman candidate who already is experiencing a pay gap and has lower previous pay can be leveraged.”
Ultimately, the decision is made “not to bring her pay to where her credentials say it should be but [to] where a recruiter can get the best bonus.”
“One of the most significant reasons for the gaps between men and women is tied to parenthood, with mothers typically taking on more caregiving responsibilities,” says Sara Sutton Fell, CEO and founder of FlexJobs, a service devoted to helping people find flexible job options such as telecommuting and freelance work.
According to recent Pew research, roughly 4 in 10 mothers say they have taken a significant amount of time off from work or reduced their hours to care for a child or other family member, compared with one-quarter of fathers. And 27 percent of women have quit a job altogether due to familial responsibilities. Studies show that such job interruptions translate into a loss in career momentum and, ultimately, reduced long-term earnings.
Only 1% of Fortune 1000 companies have at least one woman on their board of directors.Source: 2020 Women on Boards.
Offering more-flexible workplaces is one way HR can help retain more women and move toward gender equity at all ranks and pay levels. “HR leaders should embrace options like partial or full telecommuting, flexible work schedules, and professional part-time roles,” Fell says.
“These aren’t just perks that benefit employees,” she says. “They are sound business decisions that help to support the long-term success of organizations. If fewer women [experience] career interruptions, think about the institutional knowledge companies will retain; the benefits of keeping productive, well-trained employees; and the turnover costs [employers] won’t have to pay.”
Of course, another factor in the pay gap is women’s underrepresentation in senior leadership roles, says Brian Levine, Mercer’s innovation leader for global workforce analytics. Top positions command higher salaries, so the real challenge is to ensure that women have greater access to those roles. “Those organizations that are best-situated to drive real change are assessing the processes by which roles are filled and employees are promoted, ensuring equity in access to such roles, and are focused too on providing diverse employees with the experiences that are required to be successful,” Levine says.
Companies that don’t promote or hire women to senior leadership do so at their own peril, according to a 2016 analysis from the audit, tax and advisory firm Grant Thornton. The assessment of 1,050 companies in the U.S., the U.K. and India found that companies with men-only boards of directors forgo potential profits to the tune of $655 billion across the three economies.
Globally, the proportion of senior leadership roles held by women—24 percent—has risen just 3 percent in the past five years, according to the analysis, while the percentage of businesses without any women in senior management has remained static over the past five years at around 33 percent. “That means a third of companies still have no female input into executive decisions and no women helping grow the business at a leadership level,” the study stated.
Meanwhile, an April report from the McKinsey Global Institute indicated that the United States could add up to $4.3 trillion to its annual gross domestic product by 2025 if women were to attain full gender equality in the workplace.
“The business case for gender diversity in the workplace has been made,” Mead says. “Studies show companies are more successful with more women in the ranks. They have higher average returns, fewer incidences of fraud, better decision-making, lower turnover and higher productivity.”
Female-friendly companies have an edge when attempting to attract and retain the best talent, since increasingly women have easy access to tools that help them seek out the cultures that best suit them. Mead’s InHerSight platform, for example, allows women to anonymously rate companies on 14 metrics, including flexible work hours, maternity and adoptive leave, family growth support, salary satisfaction, mentoring, management opportunities for women, and female representation in leadership positions.
But while HR professionals play a pivotal role in shaping processes and culture, they can’t do it alone. “For the HR team to be effective change agents, it’s critical that their gender diversity initiatives have buy-in from top leadership, that they have a voice … and the ability to influence the decisions being made at the top,” Mead says. “Then it becomes a partnership between HR, top leadership, finance, managers and the company as a whole.”
No one claims it will be easy. “When you hear it might take 80 to 100 more years to reach gender equality in the workplace, it can be rather sobering,” she says. “But these kinds of assessments can also be incredibly motivating. … Do I believe it could take 80 to 100 years? Yes. But I also believe that, with good data, transparency and accountability at the company level—which is what we’re focused on—we can get there a lot sooner.”
Dawn Onley is a freelance writer based in Washington, D.C.
Illustration by John R. Anderson Jr for HR Magazine.
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