The Gender Pay Gap: How Does Your Company Measure Up?

The gender pay gap persists, despite recent improvements. Census data over the past decade indicates that, on average, women earn roughly 80 to 85 cents for every dollar earned by men in comparable job positions.

This is a hot topic in political circles. But it can be a problem at your company — even if you’re not worried about facing discrimination charges. Here’s the story.

Discord in the Workplace

The perception that women are paid less than men is common. A recent Pew Research survey found that one-fourth of women believe that at some point they’ve earned less than men in their companies doing the same job.

When women believe they’re not paid or treated fairly at your company, it can cause several problems. They may become less motivated, which can impair productivity and quality. It might make female workers less likely to suggest innovative ideas — or even provide a rationalization for them to commit fraud. Alternatively, some women might simply quit.

If your organization develops a reputation as an employer where men do better than women, fewer women will apply for open positions. Nowadays, many candidates review online sites like Glassdoor and consider best-places-to-work rankings before submitting a job application. In today’s tight labor market, your company needs to attract as many qualified candidates as possible — and talented women offer fresh, diverse perspectives that you can’t afford to miss.

Number Crunching

National averages are one thing. But what’s actually happening inside your organization? The answer can be found by studying the wages paid for various positions at your company. This analysis can help determine whether there’s any justification for a perception that women earn less than men for comparable jobs at your company.

Typically, when there’s gender pay disparity, the culprit isn’t intentional discrimination. Rather, it’s differences in work experience when people are hired, or the duration that some workers have had on the job. Although more fathers are taking breaks from their careers to raise children than in the past, the majority of parents who do so are mothers.

But, beware that performing a formal study could come back to haunt you. If your wage analysis reveals a substantial imbalance and you ignore it, the data could become a “smoking gun” if it’s discovered in any future pay discrimination lawsuits.

On the flip side, if your analysis reveals that you don’t have any potential “wage gap” issues, that’s good news — especially if you’ve been proactive about ensuring pay parity. Should you share the good news with your employees? The answer is unclear.

The data can provide solid evidence that you’re committed to pay equity. But, raising the topic of pay policies may also invite more curiosity and questions about your compensation practices than you bargained for.

Proactive Hiring Practices

You have several options if a wage analysis reveals a gender pay disparity. Before you decide what to do, however, investigate what’s behind the gap.

For example, suppose that men occupy most of the higher paying jobs at your company. Why? It’s possible that the hiring managers are making false assumptions about the ability of female applicants to do those jobs. Or maybe your company’s recruiting strategy inadvertently attracts more male applicants.

One way to try to overcome such a pattern is to ask someone who won’t be screening applicants to edit resumes and applications. The goal is to remove any information (including names) that would reveal the applicant’s gender. This could lead to more women getting through the first round of elimination.

Also consider having a second person review the job applications of women who weren’t selected. If the reasons for a female applicant’s rejection aren’t clear, the hiring manager needs to explain why the individual was rejected. If no valid reason is provided, the manager might decide to give the applicant a second chance.

Of course, bias or discrimination isn’t always the reason for a gender pay disparity. Sometimes it’s simply the result of male workers having more education or training than female workers. In these situations, your company can take proactive measures to help bridge the gap. For example, you might offer training or mentoring opportunities. This ensures that women willing and able to elevate their qualifications for higher paying jobs can do so.

Another possible step — that’s actually required in a few states — is to refrain from asking job applicants (male or female) for their salary history during the hiring process. Women who have been out of the workforce for a few years often haven’t been in positions long enough to reach higher salary levels. But that doesn’t necessarily make them less qualified for a job or unworthy of competitive pay. Make pay offers based on the value of the position to your company, regardless of the applicant’s pay history.

Be a Leader

Your company can’t single-handedly overturn historic patterns of gender-based pay inequity. But companies that take proactive measures to level the playing field create a positive work environment for all workers. In turn, this can help achieve the company’s performance, hiring and social responsibility goals. For help evaluating your company’s current compensation practices, contact your financial advisor.