Why the Next 18 Months Are Critical for Closing the Gender Pay Gap
Back in January, a proposal was put forward by the Equal Employment Opportunity Commission and the Department of Labor that would require employers with 100 or more employees to report earnings data by gender, race, ethnicity, and job category. The 60-day period for public comments closed on April 1.
If this proposal moves forward, the reporting requirements will go into effect in September 2017. The agencies say they plan to use this new data “to assess complaints of discrimination, focus agency investigations, and identify existing pay disparities that may warrant further examination.”
Whether you support the EEOC proposal or not, this is a game changer.
That’s roughly 18 months for companies to get their houses in order. And even companies that publicly lend support to gender equity in the workplace may not have turned the microscope inward to ensure they’re paying equitably to a degree they’d feel comfortable reporting to the federal government.
Many object to the new EEOC reporting proposal, citing issues such as the requirement to report W-2 earnings vs. base salary and the lack of detail on how the EEOC plans to use the data to enforce pay equity. But it’s unclear at this point whether any opposition will prove persuasive enough to forestall the 2017 deadline.
So what should employers do to ensure they can comply if and when the proposal goes into effect?
Many organizations have worked to tackle potential gender discrimination by providing diversity training for employees or creating committees to focus on diversity and inclusion. Unfortunately, those programs haven’t worked. According to Harvard Business Review, “A study of 829 companies over 31 years showed that diversity training had ‘no positive effects in the average workplace.’ Millions of dollars a year were spent on the training resulting in, well, nothing. Attitudes — and the diversity of the organizations — remained the same.”
What does work is data. Do you have any existing gender pay gaps you can’t readily explain within your organization? If so, dig in to figure out why. Address it. And, then figure out how to ensure it doesn’t happen again—by doing things like ensuring pay increases and bonuses are tied to market data and measurable results. Equitable pay doesn’t necessarily mean 100% equal, but it does mean that the reasons for the differences are clear.
And if you're having trouble selling the idea—up or down the corporate ladder—keep this in mind: Gender equity in the workplace isn’t just the right thing to do; it’s good business. Ensuring all workers are paid fairly puts your organization in a better position to attract and retain talent and protects against any liability issues. In the war for the best talent, a visible commitment to equitable pay is a competitive differentiator, so don’t wait for the 2017 deadline. The more vocal you are about your organization’s commitment to equitable pay, the better.
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Equal pay for equal work is step one, however. There’s also work to do to ensure equal opportunities for all workers when it comes to access to the best-paying positions within an organization. If women are underrepresented in leadership positions or specific in-demand jobs, the organization can suffer. It’s been definitively demonstrated that more diverse teams lead to better business outcomes—increased revenue, more innovation, etc. According to an analysis by McKinsey & Company, companies in the top quartile for gender diversity were 15% more likely to outperform those in the bottom quartile.
The bottom line: Now's the time to take action on this. Ensure that your pay decisions are data-driven, documented and defendable. Businesses can’t afford to get this wrong.