Closing the Gender Pay Gap: Part 1 — Why It Matters for Compliance and Engagement
Addressing pay equity gaps is preeminently a task for finance leaders largely because it's not just a fairness and compliance issue, but a financial one.
Though estimates often fluctuate between 78 and 82 percent, the U.S. Census Bureau reports the average woman working full-time makes 79 cents for every dollar compared to men. The gender pay gap represents both a compliance issue — especially as more state governments begin to enact new laws to close the gap — and an employee engagement challenge, both of which can impact your bottom line.
This is part one of a two-part series that explores the importance of addressing the gender pay gap. Here, we discuss why it's vital for finance leaders, in particular, to address the issue within their respective organizations.
Going Beyond Flexibility and Support
Developing policies that address gender pay equity isn't just about fairness and legal compliance, but it could also provide a powerful recruitment and workforce engagement tool. For example, financial services firm Edward Jones was named among the Top 10 "Best Workplaces for Women" by Fortune because of its generous benefits offerings and flextime policies. According to Great Place to Work, 63 percent of its employees are women. The business is highly profitable and has one of the highest level of customer satisfaction rates in its industry, according to Financial Advisor.
It's no surprise that organizations leading the way in supporting its female employees are also in the most competitive industries, where winning the war for talent is critical. According to Fortune and its annual report, 100 Best Workplaces for Women," most businesses listed are in financial services, consulting, IT and health care.
Investing in Closing the Gender Pay Gap
Another successful organization in a highly-competitive industry is Salesforce, which has gone beyond flexibility and benefits to attract and engage female talent. Salesforce is attacking its gender pay gap head on, garnering attention and enhancing its employer value proposition among women.
Fortune reports that the business recently performed a salary audit for its 17,000 employees to determine if men and women were receiving equal pay for equal work. After analyzing the results, the business indeed found a gender pay issue. According to Salesforce, the organization spent $3 million to eliminate these pay differences. It also seeks to close its gender gap by accelerating its leadership development program for women, which resulted in a 33 percent increase in the number of women promoted last year.
The Essential Role of Financial Leaders
Financial leaders will play a key role in supporting organizational efforts to identify and close the gender pay gap, if applicable, at every step of that challenging process. Here are a few on the necessary skills and capabilities they bring to the table:
1. Data and data analytics capability. Financial leaders should provide the financial support necessary to update systems. This could help ensure their organizations can internally aggregate and report on data relevant to understanding their organization's pay and compensation data, in order to uncover potential pay equity issues.
2. Financial analysis. Financial leaders should also provide the necessary financial analysis to close identified pay equity gaps. The work of analyzing the problem, exploring options to solve it and deciding upon solutions optimal for the organization will require a deep level of financial know-how.
3. Audit practices. Offer methodologies and analytical expertise to conduct and analyze ongoing pay audits that will be crucial components of resolving pay equity issues. Financial leaders should be partnering with other C-suite leaders and legal counsel to effectively structure, conduct and evaluate such audits.
4. Budget planning. Provide compensation budget and budget analysis for the closing of pay gaps once they are identified and analyzed. As the Salesforce example cited above shows, organizations need to invest to close pay gaps.
5. Procedural overhaul. Promote policies and procedures that help bring about gender pay equity. For example, financial leaders may wish to partner with HR to craft policies promoting greater pay transparency, so gaps get exposed to the cleansing light of day. They may also want to support investments in accelerated leadership programs for women. No matter the policy change, it will require buy-in and potential financial investment from the organization's financial leaders.
Addressing pay equity gaps is preeminently a task for finance leaders largely because it's not just a fairness and compliance issue, but a financial one.
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