When Dan Schulman became the CEO of PayPal (3.8 stars), he didn’t know his employees’ salaries, but he wanted to make a commitment to the company—and ensure that all 18,000-plus employees were paid fairly. So he hired two outside consultants to conduct in-depth research. Schulman learned that there was a $3 million pay gap—so he quickly paid it.
"Truly in the great scheme of things," Schulman told CNBC, "it's incredibly small."
Schulman recognized what many companies fail to see: When you close the gap, you are not only supporting your employees, but you are signalling to future employees that you are a fair employer who believes in diversity, equality, and fair pay.
Thankfully, PayPal isn’t the only company prioritizing equal pay. Many others are implementing new practices to ensure all employees are being paid on merit regardless of their gender, racial, or ethnic makeup. If you wish to close the pay gap within your own company, business, or organization, here are four best practices to implement now:
1. Conduct a company-wide audit
The smaller the company, the easier it is to run an audit, but regardless of size, every company has the capability. There are various online management systems available for HR departments, and there are reliable consultants available for hire.
Adobe (3.7 stars), a company with 19,000-plus employees is one of the companies that has taken a stance on “pay parity,” which is the insurance that “employees in the same job and location are paid fairly relative to one another, regardless of their gender or ethnicity.”
This international company took an analysis of their employees and their pay ranges based on job families (ex. entry-level positions vs. managerial positions) and location. They closed the gaps, as needed, and yet, they admitted in an Adobe UK Gender Pay Report, “we still have work to do. We are committed to a more diverse workforce. We believe that it’s not just the right thing to do; it also leads to higher performance and better results.”
When you conduct your audit, we recommend taking the following factors into account: job position, pay rate or salary, and location. Depending on the size or structure of your company, you might be more specific and focus on each department or each team separately. When you have the information, analyze the numbers and see where you’re at—see the differences between gender, educational background, race, etc. Statistics show that women with advanced degrees are under-utilized and under-compensated for their education. Is this true in your company?
2. Create a streamlined review process
Many employees (and employers) believe the performance-review process to be trivial, unrealistic, and time-consuming. According to a study conducted by Wakefield Research, more than 90 percent of employees would prefer their manager to address mistakes and learning opportunities in real-time.
Ongoing conversations between managers and their teams are crucial, especially when it comes to constructive criticism, ongoing disagreements, overall confusion, or need for improvement, but here’s why you should keep or reinstate performance reviews: These reviews offer an unbiased look at an employee’s work efforts, ensuring that all employees are receiving the right pay for the work.
A comprehensive performance evaluation might include the following:
Quality of work
Ability to meet established goals
Interaction or collaboration with coworkers
Willingness to learn and take on new challenges
Attendance and dependability
When conducting a fair and reliable review, you can use a point system (1-5) with the option of providing written feedback. The review or appraisal should not be used as the only source of feedback. Additionally, these reviews should be planned so employees can prepare for them. A yearly review is common, but perhaps you’d like to make these quarterly. Either way, make sure your employee has a heads-up on these dates and make sure that direct managers are the ones conducting the reviews.
The goals should be outlined: to encourage improvement, to reward work, to ensure that there’s an ongoing discussion between manager and those being managed.
Eli Lilly and Company, has been conducting research for more than 20 years to ensure they’re paying their employees fairly. They use performance, experience, skills, job level, and responsibilities to determine what an employee is paid (regardless of gender, race, or ethnicity).
3. Make policy changes
According to PayScale’s The State of the Gender Pay Gap 2019 report, women tend to work in lower-level, lower-paid positions and women of color, in particular, face the most barriers when it comes to pay and opportunity.
Take a look at your findings. Do you employ more male managers than female managers? Do you have any women of color in your executive team? If you’re wondering why you have more males in higher positions, the problem likely lies with your company policies and the opportunities (or lack thereof) offered to your employees.
Start to ask the following questions:
Do you offer reasonable policies on medical leaves, including maternity and paternity leave ?
Do you offer affordable reproductive health care?
Do you offer affordable childcare?
Is mentorship encouraged among all employees?
Do you encourage a healthy work-life balance so employees can balance their work obligations with their personal obligations?
Do you allow your employees to work remotely (occasionally, as needed, or on a recurring basis)?
When PricewaterhouseCoopers (3.6 stars) did an audit, they found that across their entire workforce, they have a median gender pay gap of 43.8 percent, which was most recognizable in senior-level positions where they employ more men than women.
To counteract this problem, which requires an ongoing commitment, PwC is implementing significant changes, including more support networks for women, training programs for women who want to reach senior-level roles, and more reasonable parental leave for both men and women (with respect to both surrogacy, adoption, and/or foster placement).
4. Encourage and mentor employees
Pay disparities have been around for decades, but one way to prevent them is to advocate for your employees and encourage them to recognize their worth. Reevaluating your company policies is the first step in making preventative changes, but following through on these policies is crucial. Consider the ways in which these companies are making long-term changes:
Holland & Knight (2.1 stars), an international law firm, runs Rising Star® Program, a year-long program offered to a select group of women lawyers. The program focuses on marketing, management and professional skills development, professional mentoring, and experiential learning. Their Women’s Initiative aims to enhance professional opportunities for women lawyers inside and outside of the firm.
Accenture (3.5 stars), a global management consulting and professional services firm, aims to close the gap and increase the number of women working in executive-level positions. They have created Employee Resource Groups (ERGs) for women, a personalized training program, and flexible work opportunities (including telecommuting and part-time arrangements).
We understand that bridging the gap might cost you now, but it will pay off later. By analyzing your current company, making effective policy changes, and encouraging support systems, you are choosing to bring more diverse voices to your business, which will, in turn, lead to better results and more satisfied employees.