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Why Do You Pay Women Less?

The data isn’t perfect but isn’t very disputable either. On average, businesses pay women less. Yes, for the same basic jobs at the same companies. Sometimes the problem is minor (Salesforce’s correction) and sometimes the issue is more pronounced (Barclay’s “Pays Females Half that of Males”). But, like bugs in your salad, even a tiny amount is probably beyond palatable.

The question isn’t “is there a pay gap,” the issue is why a pay gap exists.

Since the readers of this article lean heavily to HR and Compensation professionals, this seems like the place to ask that question more personally.

Why, do you as a HR or Compensation professional, pay the women less than the men at your company?

Decades ago the excuses for a wage gap included education levels, experience levels, and the whole having children thing. More recently, I have heard that it’s because women negotiate differently (less effectively) or have different priorities when getting a job. I have also heard that women are willing to leap to new and better positions for less money than men. I am sure that these are legitimate reasons for some of the discrepancy, but it just feels like they couldn’t be the reason for the majority of the issue.

Just so we are clear, incentive pay makes the wage gap worse. Usually, targeted incentive pay is a determined as a percentage of base pay. The leveraging of both short-term and long-term incentives magnifies the pay gap. The higher the position, the higher weighting of incentives to the base. So, as women climb the ladder, they are more apt to fall further behind.

Many companies are moving more focus to variable pay programs and pushing these programs deeper into organizations. Without some proactive thinking and planning, we may be creating a path to worse gender equity issues in the future.

This again brings up the fundamental question of “WHY?” I have never met a Human Resources or Compensation professional that consciously set pay for females lower than males. Not once.

I have worked with a few companies that had no gender gap, and even a company that had a reverse gender gap. But, they are the exception. Even in the best-intentioned companies, I see consistency issues. These are often small gaps, but they are as annoying and obvious as a scratch on the lens of your glasses.

If we can’t answer why we have pay gaps, can we at least determine why we haven’t taken a little bit of time and money to fix them?

If there were bugs in our salad, we would immediately stop eating and get a new salad. If our glasses get scratched, we will put up with it for a while, but not forever. Why wouldn’t we fix things so clearly wrong and simple to correct?

The ball is in your court. In the comments section explain in a paragraph or two why you pay women less, or how you know you don’t. If you fixed things recently, let other readers know about your approach and costs to correcting things. Thanks for contributing your expertise!

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