Closing the Wage Gap: How These 5 Companies Are Working to Achieve Pay Equity

Closing the Wage Gap: How These 5 Companies Are Working to Achieve Pay Equity

If the arc of history bends toward justice, the equal pay arc hasn’t been very flexible. When the Equal Pay Act became a federal law in 1963, women in the United States made 59 cents for every dollar men earned doing the same work. In 2000, it was 73 cents. Today, it stands at 82.

We’re making progress — at much less than a half cent a year.

According to the World Economic Forum’s Global Gender Gap Report, it may take more than 135 years to close the wage gap globally. And as Megan Rapinoe, U.S. women’s soccer star and equal pay advocate, said before a House Oversight Committee on All Women’s Equal Pay Day just a couple of weeks ago: “One cannot simply outperform inequality, or be excellent enough to escape discrimination.”

Fortunately, there are a few corporations that have risen to the occasion and managed to show up in favor of gender pay parity. But more need to step up to the plate, especially since it’s estimated that nearly 3 million American women have left the labor force since the start of the pandemic.

Closing the wage gap is no easy feat, and it does not happen in a vacuum. If your company is looking for a path forward, here are five companies that have made significant strides in achieving pay equity:

1. Establish a culture of gender equality from the top down

According to Equileap, an international data and insights firm that tracks corporate gender equity worldwide, General Motors is one of only three companies globally to achieve equal pay in the truest sense of the word. Equileap data reveals that GM achieved an average unadjusted gender pay gap of 3% or less in all bands — top, middle, and bottom — of pay and is ranked No. 5 worldwide on a combined look at 19 gender parity metrics, such as benefits and gender balance at the executive and board level.

How did an automobile manufacturer in a male-dominated industry move the needle so far? The cultural revolution at GM has been building on the inside. In 2001, GM became the first and only auto company to offer a women’s dealer program. In 2014, they became the first U.S. car manufacturer to have a female CEO and in 2018, GM became the second Fortune 500 company with both a female CEO and a female CFO. They also have a board of directors that’s made up of more women than men.

To follow those female friendly metrics, GM has been working across the board to instill equitable practices in every area of its operations, such as offering flexible hours and training bootcamps for female employees. “Diversity is all about the pipeline,” says Mary Barra, the GM CEO who rose up through the ranks as an engineer. “And it’s not just about gender, but about all forms of diversity.”

2. Audit your salary numbers and be transparent about the results

International beauty product mainstay L’Oréal is among the most highly lauded and top-ranked companies worldwide for achieving equal pay and gender parity over the last decade.

But the company was in a different place 20 years ago. Jean Claude Le Grand, executive director of human relations at L’Oréal, told the story of how the company decided to make a radical shift in a female direction: “We looked round and realized that we had started as a company of men, and we were still a company of men, selling products to women. This was not sustainable, and we needed to change it. We made the decision, but it wasn’t something we did overnight, it has taken years for us to address every part of this system and to make sure that it works, and we are still looking for improvements. The work never ends.”

L’Oréal became a pioneer in the industry in 2007 when it called upon­ the French National Demographic Research Institute to conduct a thorough gender pay gap analysis and go public with the results. (This practice contrasts greatly with U.S. companies, where only 9% of corporations publish information on differences between the salaries of men and women.) L’Oréal also works with two independent organizations that continue to do in-depth, rigorous audits of staff and hiring policies each year.

By taking a hard look at their numbers and hiring practices, the company was able to make adjustments to level the playing field. Today 46% of the executives at L’Oréal USA are women and pay equity averages within 5%.

3. Don’t penalize women for having children

DNB, the largest bank in Norway, earned top honors in Equileap’s Gender Equality Global Report and Ranking for being the world’s most gender-diverse corporation in 2021. In addition to achieving equal pay across all pay bands, DNB goes above and beyond most companies to ensure that women in the workplace are treated equitably.

DNB’s chief executive, Kjerstin Braathen, says the key to the company’s phenomenal equal pay success is to make sure women aren’t disadvantaged when they have children. Not only does DNB offer a minimum 20 weeks of paid parental leave to its employees, but the company has also instituted supplemental pay for employees when they are out on maternity leave. These types of adjustments help to offset the typically lower salaries of women who take time off to have children.

The organization has also established rules for hiring that ensures women are considered at every level. At DNB, the final round of interviews for any open position always includes two candidates, the best man and the best woman.

4. When it comes to salary, don’t ask about the past

In 2009, Starbucks set about to tackle equal pay. Ten years later the Seattle-based coffee empire announced: “Starbucks has reached 100 percent pay equity for partners of all genders and races performing similar work across the United States.”

To hit their goal, Starbucks implemented several policies, including advising their hiring managers not to consider a candidate’s previous salary. This helped Starbucks level the playing field when hiring men and women.

By no longer asking candidates about their salary history, the company was able to stop importing pay inequities each time it hired a new associate. Sara Bowen, an attorney and former lead of Starbucks Inclusion, Diversity, Equity, and Accessibility (IDEA) team, said: “One of the most important things to get right is starting pay. If a woman comes into a company low, she tends to stay low. Prior salary can be tainted and should not dictate how we pay our partners.”

This may be the single most important step a company can take, a study published last year suggests. Researchers from Boston University’s School of Law found that in states where it is illegal to ask about salary history pay for people who changed jobs increased 5% to 6% more than for workers who switched jobs in other states.

Rather than ask candidates about their earning history, Starbucks enters experience, skills, and (sometimes) education into a tool it calls “an offers standard calculator.” The calculator then sets out a very narrow range of what starting pay should be.

5. Offer gender diversity training to help employees see how their different identities shape how they behave

When PayPal made the commitment to achieve equal pay, adjusting salaries for women who held similar jobs to men wasn’t the biggest challenge. PayPal had a lack of women in leadership roles at the senior management level. Dan Schulman, the CEO, recognized that, as a company that is predominantly male, PayPal had to change its mindset around hiring, promoting, and compensating women so that they had the same opportunities as men to move up the ladder.

One way PayPal addressed this issue was to implement gender diversity training for all of its employees. This training helped employees see how different identities influence how they interact with the world, and how they can also alter those interactions to be more inclusive. PayPal employees became aware of where they may be blind to their own biases.

“It doesn’t matter who you are and what your gender is,” shares M.J. Austin, PayPal’s head of product management, infrastructure, and operations. “That unconscious bias does show up. It shows up when you look at the salary that you’ve paid different employees and you say, ‘Wow, why is this 2% less each year for, say, an employee who is female versus male?’ Then you realize that there is just this natural unconscious bias that happens.”

Final thoughts

Achieving pay equity is not easy. It took Starbucks a full decade of diligent work to reach it. And even once it has been attained, pay equity is not guaranteed — companies need to keep measuring and working and making adjustments, all the while keeping in mind that it is the right thing for employees and the business.

“Even if we are pioneers in gender equality,” says Jean Claude from L’Oréal, “and if our actions are valued, we must remain committed because we are convinced that gender parity is a performance issue and a key driver for innovation.”

*Photo from GM

Posted in: Controlling Bias, Diversity Hiring

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