Real Leaders

Erasing Gender & Racial Pay Gap Requires a Uniform Approach

Today marks the launch of Mind The Gap, an initiative to bring together organizations who have done the hard work of studying and correcting pay gaps.

Never before has there been a public, generally accepted methodology for measuring pay gaps across race, gender, or any other demographic segment. Mind the Gap’s methodology and implementation guide will be made available for free to organizations and companies of any size to measure and eradicate internal pay gaps.

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Workplace issues such harassment, inequality, social responsibility, and the impacts of automation on the workforce continue to dominate the news. As a serial entrepreneur and CEO who led an effort to measure and fix the gender pay gap at my last company, I’m heartened by the increased awareness of the need to close the gender and racial pay gaps.

Most Americans have heard about the uproar over the pay discrepancy during the reshoot of All the Money in the World (which, oddly enough, was caused by the additional workplace issue of sexual harassment stemming from Kevin Spacey). Hollywood pay discrimination makes news when Michelle Williams is paid less than Mark Wahlberg, but similar wage discrepancies occur on a large scale in almost every organization with employees. To correct this, it needs to be accurately measured, and include not just men and women but also consider data on race, age, religion, and sexual orientation.

The Equal Pay Act of 1963 made it illegal to pay differently on the basis of gender. However, because such cases are nearly impossible to prove, the burden still lies with the employer to ensure equity in compensation. Some companies, like, have undertaken deep compensation reviews and determined that indeed there was an underlying bias towards paying women less than men. After the first review in 2015, the company bravely disclosed it had uncovered $3 million in gaps which needed to be closed.

Surprisingly, in 2017 conducted another study and disclosed another $3 million in gaps. This was not from unintended bias but because it had also acquired many other companies with pay gaps – illustrating the pervasiveness of this problem. While this is progress, no doubt, we don’t know what methodology was used by in documenting the scope of the problem.

Without a uniform, universally accepted, and publicly available measurement methodology, companies large and small that want to eradicate the pay gap are hard-pressed to know where to start. There’s more to this than signing the White House Equal Pay Pledge or Glassdoor Equal Pay Pledge, or even he most recent announcement by Citigroup modeling disclosure and correction of the problem. Bloomberg’s new Gender Equality Index.

Bloomberg’s new Gender Equality Index includes a group of major companies committed to focusing on gender equality, but details on what the index entails are lacking. The fundamental problem is that none of these companies disclose how pay gaps are measured. And accurate measurement is no simple task.

Where to Start
To ensure equal pay for equal work, organizations must consider factors such as tenure, geography, experience and most importantly, performance. These adjustments or considerations start to cloud the picture and make it difficult for an organization to perform a simple quantifiable study. This begs the question: How are these organizations undertaking the hard work of ensuring equal pay? Salesforce founder and CEO Marc Benioff told CNN said that it’s as easy as pressing a single button, but I beg to differ. Like any human issue, it is very difficult for numbers to tell the whole story, especially without rules as to how those numbers are generated.

There is a reason the accounting industry abides by Generally Accepted Accounting Principles (GAAP). Simply put, the numbers must be normalized across companies, organizations, and sectors so that they can be compared and trusted. No such accepted methodology exists currently for pay gap reviews, until now.

GoodWell and Glassdoor both make methodologies publicly available which allow for the institutional evaluation of pay gaps free of charge. These methodologies may not be perfect (yet); however, they are consistent, transparent places to start in creating more fair, ethical and humane organizations. More work is needed to gain universal acceptance, but our open-source model is an excellent place to start.

Companies like Salesforce, Adobe and Citigroup, have done the hard work of developing methodologies, but because they have not shared them with the world, employees, peer companies, and the general public are left to guess how pay disparity is calculated. Mind the Gap will collect and confidentially analyze all of the methodologies submitted to us. This initiative will highlight the similarities and differences in the methodologies and convene experts to produce our final methodology which will be publically available to anyone, free of charge.

Let’s eliminate the confusion over how to measure pay gaps and get down to the hard work of eliminating them.

If you are interested in contributing your organization’s methodology or joining the working group, please complete this form.

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