Google is the latest company to come under fire for allegedly paying female employees less than their male counterparts, but the tech giant has refused to disclose compensation information to Department of Labor (DoL) investigators. In a world where employer brand and brand sentiment are increasingly interlinked, and corporate transparency in people practices is becoming the new golden rule, this decision could hurt the company. Even more crucially, given Google’s position as one of the world’s top brands, it may slow progress in closing the gender wage gap altogether.
Gender equity is an issue of incredible focus and debate for employers and lawmakers, particularly when it comes to compensation. But getting to the bottom of measuring pay equity at a given company is easier said than done. For instance, in the current example of Google, where the DoL is suing Google for details related to Google’s compensation data, the devil is in the details: Google may be defining — and therefore measuring — “equal pay for equal work” differently than the Department of Labor.
This is a wake up call for corporate leaders and boards: understanding and measuring gender equity should be a top priority for your organization, or else risk costly consequences.
Part of this is about realizing and accepting that gender equity is about more than equal pay for equal work. As one example: a Visier Insights report that analyzed an aggregated database of over 160,000 US-based employees of over 30 large US enterprises found that an underrepresentation of women in manager positions — in particular during the key childcare years — directly drives the overall gender wage gap.
If a company pays women and men the same for equal work, but then underrepresents women in the better-compensated manager roles, has that company achieved gender equity? I think not.
Here are some actions leaders can take to promote and ensure gender equity:
- Begin by gaining a high-level understanding of the state of gender equity within your organization. Start with simple metrics like “female ratio” (looking at the percent of total headcount that are female) by department, role, and/or location, and in your hiring pipelines.
- Dig deeper by finding out if pay and performance ratings are unbiased for men and women. Compa-ratio is a classic compensation calculation that indicates how close a person’s base pay is the pay level midpoint for the role they perform. If women have a lower than average compa-ratio, then it is likely that pay decisions are not being made equitably. Similarly, understanding the proportion of employees who receive each level of performance rating and then comparing this to the proportion of each rating for female employees will uncover if performance ratings are handed out in an unbiased manner.
- In the Visier Insights: Gender Equity report we found that men and women are being, on average, promoted at the same rates by age group. However, from age 32 women are increasingly underrepresented in manager positions. This Manager Divide directly drives the widening of the average wage gap for men and women. To address this, measure not only promotions by gender, but also the nature of the promotions: by role, department, or location, find out if the percent of women promoted to or holding manager positions is lower than the percent of men promoted to or holding manager positions.
- Take steps to correct gender inequity, starting with your processes for hiring and promotion. Implement the Rooney Rule: for every manager position you have open to fill, consider “at least one woman and one underrepresented minority” in your slate of candidates. Consider blind screening of resumes (removing names or other gender identifiers from resumes) when selecting applicants for interviews. And introduce consistent and gender bias-free performance management processes.
- Given that the Manager Divide, in particular, is connected to the years when women are most likely to have increased childcare demands, look into ways your organization can better support parents during this time. Paid parental leave — that is equally available to mothers and fathers, and which is socially acceptable not just for mothers, but also for fathers to take — could be a key part of your solution. So could flexible working time arrangements.
Make the business case for gender equity at your organization. It isn’t just about fairness, avoiding lawsuits, and protecting (or building) your employer brand (check out the InHerSight for an idea of what the future holds — a Glassdoor-type site that focuses on rating companies from the perspective of their support of women). Research by McKinsey shows that companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry medians. According to a 2016 McKinsey Global Institute report, if full gender equality is attained, $4.3 trillion could also be added to the U.S. economy by 2025.
This article first appeared in HR Technologist on August 8, 2017.