Recently, the spotlight has once again intensified on pay inequities and the importance of pay transparency. There’s been buzz for years about the discrepancy between what women and men are paid, and in fact we have written on this topic in past. The recent surge in lawsuits around the country certainly shows that it’s still a critical and relevant issue in the workplace, and new legislation in different cities and states adds to the importance of understanding this subject. 

Currently, women earn 84 cents for every dollar earned by men, and that pay gap widens when you filter for women of color or other intersectional identities. For example, Black women earn 67 cents for every dollar earned by men. At Orange Grove, we’ve been tackling pay equity and pay transparency issues for years through uncovering the hidden disparities that exist in organizations. The truth is, leaders aren’t deliberately underpaying women – the problems lie in systemic biases, which aren’t always so obvious. We’ve found that inequities usually show up in these key areas in an organization’s pipeline.

Job Roles

The first critical area is job roles, since the perceptions of a job’s value can be influenced by gender. For instance, marketing roles tend to be filled by women and are considered “pink collar” jobs, while finance roles, which have higher salaries, are filled by men. Though the two roles have similar qualifications, responsibilities, and background experience, the manager of finance is often paid more, likely because finance is a male-dominated field and its value is weighted differently by organizations. 

Career Levels

We also observe disparities at different career levels in the promotion pipeline. For example, a higher proportion of women are placed in what we call “half-step” career roles, such as an assistant manager or an associate VP, while we often find a higher proportion of men are promoted into “full-step” roles such as manager or VP. Often these roles are remarkably similar in responsibility but not in pay.

Tenure

Length of tenure is another factor, because if a company is founded by men, and initially hires mostly men, they’ll be at an advantage for tenure-based pay scales and positions compared to women who join the company at a later date. Even though a woman may have similar experience and qualifications compared to a man, because they don’t quite have as much tenure in the company, the disparity perpetuates.

Hidden Pay

Another problematic area is hidden pay. Salaries may be calibrated appropriately, but men might receive higher bonuses, be offered earlier access to stock option programs, or receive different perks. Women are sometimes penalized for taking maternity leave, with their absence causing delays in raises or promotions, or missing a potential promotion cycle entirely. 

Performance Ratings

Though ratings are intended to calibrate performance, unintentional biases can affect ratings. For example, many women do not negotiate pay with the same vigor that men do, and if they do, they can be viewed in a more negative light than men are for the same tactics. This means women may not be rewarded for negotiation efforts similarly to men. Past history is also a factor, because if a woman discloses a lower past salary, which they received due to pay inequities, then they may be offered a salary with only a slight increase compared to a male counterpart, thus perpetuating past disparities. 

Once you’ve identified where your inequities lie, the next step is to tackle them systematically. The most important step is measurement. Any differences should be identified, and when you see a trend –  something that is not just a one-off situation, occurring more than once – it should tell you something is amiss. There are many tools for measurement, including payroll systems that come with features that can flag potential issues. If these tools aren’t available, or you would like an expert analysis that will examine your pay at a deeper level, our team at Orange Grove is available to support you.

Once you’ve completed the measurement stage, and you have appropriately addressed any disparities, you’ll want to work towards more transparency. This involves setting and making pay ranges clear so that all employees are aware of the range and have a sense of where they should be in that range, especially since they should be receiving regular feedback on their performance. We’ve found that younger generations discuss salary expectations openly, unlike older generations, and that they expect to know salary ranges when applying for jobs and during the recruitment process. Finally, you’ll want to calibrate conversations with multiple voices when making pay decisions so that you align outlying opinions and avoid biased recommendations.

We’ve realized through the years working with clients that equity isn’t a one-time fix and you’ll need to devote ongoing attention to the issue. That means that after you do a pay calibration and fix any issues, it’s critical to measure annually (if not more often) to ensure equity is maintained. Of course, the process needs to be paired with good leadership, which means managers should be checking in with employees and giving updates on progress so that they’re aware of how they’re doing. By proactively addressing pay inequities rather than reacting to lawsuits or legislation, your organization will be at the forefront of improving employee satisfaction and transparent workplaces.