After I completed my MBA and returned to the workforce, I was offered $70,000 for an executive compensation role at a multi-billion dollar international company based in the U.S. This offer was more than twice the pay of my last role. The benefits were standard for an American company, and I was excited to learn more and increase my expertise in this niche field.
Within a couple of months, it was clear my skills and experience far outweighed what I needed for the role as I was quickly moved into discussions with executives and asked to help make critical decisions for executive and board-level benefits programs. It was exciting, I was doing what I came to do, and I was praised for my efforts.
But then something happened that shifted my excitement and damaged my trust. I learned that I was the least-paid individual at my level, despite having more education and experience than my peers. My pay was $15K to $20K, below what my skills and experience were worth.
I was shocked and hurt. I thought my salary matched my experience and education. I couldn’t imagine the decision-makers would pay me less than less experienced and educated employees. For a while, I blamed myself; maybe it was my fault for not negotiating. Or was it their fault? Was it because I was a woman? Was it because I was black? Was it because of my previous pay? I would never really know, but they bet I would be happy with the offer, and in the end, they were right.
What they didn’t bet on was how much trust I lost in the leadership team after I learned the truth about my pay. Within nine months, I had a salary adjustment, labeled as an increase because of my excellent work, and I was making $85K, but that was not a consolation. I knew they were finally paying me fairly, not rewarding me for great work. They could not make up for the lost income or restore my faith in their ability to treat me fairly.
Unfortunately, mine is a typical story.
In my 15 years of speaking with and coaching women and ethnic minorities on pay, everyone I spoke with who thought they were underpaid was right. Even those who were happy with their salaries were not making as much as their white or male peers.
We have spent the month celebrating the achievements, successes, and overall badassery of women around the globe, and that is wonderful, but more is needed to fix the pay problem.
Even with new pay laws in the U.S. and the E.U., most companies will continue to use outdated policies, ignore biases, and ask unnecessary questions about past pay that will keep women from earning as they should.
I imagine a world where companies everywhere try the below (or some alternative version that suits their business) so that women are consistently paid what their skills, experience, and potential are worth.
Prepare to review or create a pay philosophy
It is essential to ensure you create a clear set of values to drive pay decisions. When a pay philosophy is in place, you can consider what it means to remedy past issues and stay on course going forward. The pay philosophy also usually includes where you want to pay in relation to the external market (lead, match, lag). Include diverse voices in this discussion and communicate this new / changed philosophy to employees.
Know your numbers
What are the pay problems in your organization, and how much will it cost to remedy them? This requires analysis, and you need more than your raw pay gap. Be ready to dive deep into base, bonus, and equity compensation by job type, and if you are a pay-for-performance org, gather performance information. If necessary, buy or borrow the skills to collect and analyze data and gain insight.
A tip: If you don’t have external pay data, don’t worry. It’s unnecessary if you are focused on adjusting women’s pay for internal fairness. However, you will need external data to determine how to pay across the company to meet your pay philosophy to lead, match, or lag the market. This can be completed in a different exercise.
Close the gap
Once you know your numbers, it's time to take action. Consider:
Don’t forget to include diverse voices in these decisions, and remember to put your money where your values are (follow your philosophy). This will be a complex exercise, and hard choices must be made, but it is worth it.
If you don’t communicate well, the efforts will be lost. Make sure to have a sharp and robust plan to explain pay changes. Ultimately, what you do will be important, but how you communicate the decisions will be critical to the success of this exercise.
Closing the pay gap is as simple, although the exercise can be a challenge. If your organization wants to build trust, get ahead of regulation, and develop sound pay practices, paying women fairly is a good place to start.
Let’s make 2023 the year of paying women what they deserve.
With layoffs in the last six months comes a new pool of talented and skilled women applying for positions. In the battle against the gender pay gap, and in line with treating women with dignity, it is crucial that compensation teams work with recruiters and hiring managers to ensure hiring practices do not create or perpetuate the gender pay gap.
Here are some practical tips to consider implementing this hiring season (and beyond):
Tip #1: Stop asking candidates for previous pay. This outdated practice builds salaries based on compensation that could have been depressed due to previous bias in a woman’s career. Focus on what the candidate offers, not what another company pays her.
Tip #2: Create a hiring range with a minimum and maximum salary for each role based on market data, internal pay, and budget. Use this minimum and maximum to keep offers in check. Hiring ranges are usually within the minimum and maximum of a role’s salary range. This allows for further pay progression for new hires once they join and their performance has been assessed during the standard review cycle.
Reserving part of the salary range also allows flexibility for hiring managers during negotiations. But be careful here and be transparent with the hiring team about the skills, experience, and other role-relevant characteristics worth paying more for. This allows you to measure women and men more fairly in negotiations.
Hiring ranges can be a bit tricky as you don’t want to falsely adverse your salary range, so be transparent with candidates about how the hiring range is calculated and why you reserve a part of the role’s salary range.
Tip #3: Don’t allow previous or current negotiations with other candidates to be the reason to pay a woman less. Historically, many women have been socialized not to negotiate or end up negotiating for less than their skills are worth. Just as many men have been socialized to negotiate. Don’t pay less than what’s fair because she didn’t ask for more. If you know you would pay more, and should pay more, do so.
Tip #4: Become self-aware and check your bias. If you find yourself during an interview or in a follow-up call with your hiring team thinking about offering less because of something immaterial to the role (for example, personality, accent, school attended), check your bias and offer what is fair.
Tip #5: It is ok to pay women for their potential. Many women have been socialized to downplay their skills and ideas. Become a better interviewer by asking the right questions. Also, ensure your hiring team has strong interview skills. Determining which candidates will deliver and innovate is much easier when the interviewing is robust.