Equal pay for equal work is a hot business, political and social issue. While we have much work to do, it would be irresponsible not to point out that tremendous progress has been made. According to Pew Research, the estimated dollar gap in pay has narrowed from 36 cents in 1980 to 16 cents.
The gap remains too large, but we can not make a change based on moral grounds alone. Business leaders need to be aware that equal pay for equal work will boost their own organization’s bottom line.
As the father and grandfather of girls, I care deeply about this matter. I understand that there are great complexities involved with this issue. A CEO is measured by gains versus losses, and not on sentiment, particularly for public corporations where a CEO must answer to shareholders. It is critical to understand, however, that paying women equally does not have to come at the expense of profits.
It’s Not a Simple Problem
Equal pay is a complex issue without a one-size-fits-all solution. By looking at the kinds of jobs women often go into – older women in lower-paying, part-time service jobs for example, compared to young women entering STEM fields – can give insights on where to stress advances. In fact, women, ages 16-34 who currently experience an 87.5 percent earnings ratio, are the most promising in closing the wage gap.
Recent Studies Demonstrate Benefits
Here are three studies demonstrating why:
- An MIT professor reported in the Journal of Economics and Management Strategy that shifting from an all-male or all-female office to one split evenly along gender lines would increase revenue by 41 percent.
- A McKinsey & Company study found that companies in the top quartile for gender diversity are 15 percent more likely to generate financial performance above the national industry median.
- A Gallup Study of different business units of two companies in the retail and hospitality industries shows significant differences in revenues up 14 percent and net profit up 19 percent, based on the level of gender diversity in each business unit.
Beyond Numbers, Three Reasons
- Elicit varying viewpoints – When you diversify, you stimulate debate and receive fresh ideas and different perspectives.
- Tap into $20 trillion in worldwide spending by women – Women control a huge $20 trillion in global spending power. It would make sense for a business to court women’s buying habits. What better way to reach potential consumers than by having women employees who understand their spending habits.
- Attract top male and female talent – Employers of choice understand paying women equally fosters and promotes a healthy business environment. When businesses maintain an inclusive culture and pay structure that recognizes women’s workplace contributions, high performers are more likely to want to join the team. Millennials, who are expected to make up 75 percent of the workforce by 2025, are keen to work in an environment that embraces diversity.
Additional Pay Disclosures Proposed
Under a recent proposal by the Obama Administration, employers with over 100 employees may have to send the government more information about what they pay. The proposal is aimed at eliminating the gender pay gap. The 60-day notice period ends April 1, 2016.
Where Do We Go From Here
At the recent Davos Conference, CEOs from companies including Barclays, Cisco, eBay, and Marriott weighed in on men’s roles in increasing greater gender diversity in the workplace. As men make up 80 percent of executive ranks and even more than that at the CEO level, men have a unique role in growing women in the workplace. Hiring and paying women is not only the right course, but data and common sense reasoning suggest that it’s simply good for business.
Contact Us
We welcome your feedback on our Compensation Alert eNewsletters. Please contact me at (847) 864-8979 or nlappley@lappley.com to discuss gender equality or other topics of interest.
