Pay equity remains top of mind for HR professionals, company executives, and employees alike. The latest statistics related to the gender pay gap in the U.S. come from the 2017 Census Bureau report, which says that women earn about 80 cents to every dollar that a man makes. This 20-cent difference adds up to women missing out on $500 billion in earnings per year.
But pay equity does not just refer to unequal paychecks. Gender bias can sneak into virtually every aspect of an employee’s lifecycle, from the interview and offer stages to performance management to company exit.
Earlier this year, Reflektive’s Vice President of Employee Success, Rachel Ernst, spoke in Chicago at From Day One — the conference for companies to forge stronger relationships with their employees, customers and community. During her keynote presentation, Rachel outlined how to identify and manage biases impacting pay equity through each stage of employment.
Why Pay Equity is Important
Ensuring men and women are treated equitably in the workforce ultimately leads to more gender equality in leadership positions, diversity of thought, and organizational inclusivity. Gender pay equity is also one of the most foundational ways to create an inclusive environment. It scratches the surface of a much deeper focus for organizations, which is an inclusive environment for people of all backgrounds.
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Below are ways to identify and manage biases through each stage of the employee lifecycle.
Let’s say a woman with an impressive resume is brought in to interview for a position at your company. After her interviews, you convene the interview committee for a debrief. A male committee member says, “I liked her a lot, and I think she’s very qualified. But, she just didn’t come across as very confident.”
This may seem like an innocent, honest statement, but it is actually an example of gender bias. Research has found that men tend to play up their accomplishments while women tend to downplay their accomplishments. It’s critical to be aware of this tendency and to design interview questions that level the playing field for men and women.
To mitigate this type of bias and promote a well-rounded opinion of a candidate, ensure there is diversity (in gender and backgrounds) within your interview committee. Make sure there is a structured interview process, where clear skills are defined that are required for the job, a set of questions align with each skill and are asked to all candidates. Finally, conduct bias education so employees understand and can identify their own and others’ biases.
You decide to bring on the woman you interviewed and ask what her ideal salary is. She responds with a number that is less than what you are willing to pay her. Another gender bias that often rears its head during the offer stage is that women tend to ask for less money than men do.
You may be able to save some money for your company by giving her what she’s asked for, but in doing so, you further perpetuate the pay gap. A best practice is to ensure you’re paying men and women equally for equal work, whether they ask for it or not.
Factors to Consider in an Offer Include:
- Existing budget for the role
- Market data in the same labor market
- Salaries of internal employees at the same level in the same job
- Geographic differences
- Competing offers
Performance Management Stage
Let’s say the woman candidate mentioned before is now officially on board at your company. You may think the issue of pay equity is behind you after the offer letter is signed, but you’d be wrong. Throughout her tenure at your company, there will be opportunities for promotions and compensation adjustments, which are often based on performance. Performance review periods are a breeding ground for biases; contrast bias, similarity bias and likeability bias abound.
Performance bias helps explain early gaps in hiring and promotions. A recent study by McKinsey and Lean In organization reveals that we tend to overestimate men’s performance and underestimate women’s. As a result, men are often hired and promoted based on their potential, while women are often hired and promoted based on their track record.
The study also reveals that women are dramatically outnumbered in senior leadership — only about one in five C-suite leaders is a woman. While women are less likely to be hired for manager-level positions, they are even less likely to be promoted to them. Women are asking for promotions and raises at about the same rates as men, but for every 100 men promoted to manager, 79 women are.
So how do you reverse this trend and make sure women have equal opportunities for promotion and appropriate compensation?
- Ratings and talent reviews
- Gender analytics on promotion rates and increases
- HR team/leadership enforcing equity
- Conducting compensation analysis twice per year
It’s important to think about pay equity even as an employee leaves a company. Severance pay is highly discretionary, and many factors are included in these decisions, including tenure, level and legal risk. We need to move through this stage with our eyes wide open and ensure we are treating each situation objectively and fairly, regardless of gender.
Gender Pay Equity is a Daily Practice
Leveling the playing field for men and women in the workforce requires all of these practices to be incorporated into daily decisions. A tool like People Intelligence can help identify and manage biases, as well as monitor changes over time and set a benchmark of success. Doing so will create a more inclusive environment for your employees.