Compliance

Wagering on Equal Wages

By Michelle Rafter

Jan. 24, 2016

The Gap Inc. didn’t wait for California’s new law on fair pay to kick in to do something about it.

Last year, the San Francisco-based retailer hired an outside firm to audit its pay practices to make sure women and men in the same jobs got the same wages. The consultants analyzed the company’s 129,992 employees and confirmed it — their salaries were on par.

The California Fair Pay Act took effect on Jan. 1, and labor experts predict more companies in and outside the state will take similar steps to minimize the gender pay gap.

That and other types of income inequality have contributed to a shrinking U.S. middle class and become an issue of the 2016 presidential election campaign. Democratic candidate Bernie Sanders has built his campaign around ending it.

Through it all, one of the most entrenched inequities has been the difference in pay between the sexes. In 2014, the median full-time wage and salary for women was 81 percent of what it was for men, according to the latest data from the U.S. Bureau of Labor Statistics. The 19-cent difference is an improvement from 38 cents in 1979, the first year the agency measured the wage gap. But it’s remained between 17 cents and 20 cents for the past dozen years, according to a November 2015 BLS report.

Like Gap, some companies have narrowed or closed the margin. They did it by creating hiring committees that represent a wide swath of the company’s employee population to curb recruiters’ and hiring managers’ potential biases. They use data-based performance metrics to award raises and promotions. They run mentor programs and sponsor opportunities that help women advance. Some work with nonprofit apprentice programs that help place women intotraditionally male-dominated trades.

'Because we have such a free-flowing conversation, it helps women feel like they're more empowered.'

—Patti Murphy, Walsh Construction

Once companies start to see that with a few simple changes they could increase their percentage of women or bring more women into leadership positions, “They’re going to put some of those mechanisms in place,” said Connie Ashbrook, executive director for Oregon Tradeswomen Inc., a nonprofit that helps place women into apprenticeships in union-heavy trades.

Here’s a deeper look at three organizations that have taken action to close the gender pay gap.

Wage Audits and Compensation Policies

Gap, which has a workforce that’s 73 percent female, hired diversity and inclusion consulting firm Exponential Talent to audit its own findings on gender pay. The firm ran a series of assessments, including tests comparing average male and female salary by level, and tests to detect differences in salary by gender based on factors such as full-time status and number of years on the job.

The consultant found no significant gender wage differences between men and women within Gap job codes globally or in any of its five largest locations (the United States, Canada, Japan, the United Kingdom and China). Gap didn’t return a request for comment, and Exponential Talent executives declined to comment.

With the California Fair Pay Act coming online, labor and employment lawyer Gary Gansle sees more companies following in the clothing retailer’s footsteps. “California is often a bellwether,” said Gansle, a partner with the law firm Squire Patton Boggs in Palo Alto, California. “More progressive states will look to California and likely adopt some or all of the new pay equity principles over time.”

He recommends companies review existing hiring and performance review policies to see if they’re likely to produce gender pay gaps and formulate a compensation philosophy that focuses on gender equity. He also suggests training management to recognize and root out unconscious biases that could cause gender-related pay problems. Companies “are more likely to work toward gender pay equity if it is an established and articulated goal,” he said.

Apprentices and Mentors

Walsh Construction Co. has taken some of those suggestions to heart to move women closer to job and wage parity in the male-dominated commercial real estate construction industry.

The 55-year-old general contractor’s workforce is still predominately male. Men represent 93 percent of its 249-person construction crew, and 69 percent of its 213-person project management and engineering staff, according to Patti Murphy, human resources director for the business, which is based in Portland, Oregon.

Many of the women in Walsh’s construction crew came in through partnerships with nonprofit groups, such as Oregon Tradeswomen, that help them find apprenticeships in carpenter, painter, machine operator and other trade jobs. Because construction jobs are covered by unions, there’s no difference between hourly wages for men and women, Murphy said.

While women might make the same hourly wage as men in construction apprenticeships and jobs, their annual incomes are likely to be lower because they aren’t offered the same hours, said Oregon Tradeswomen’s Ashbrook. The same holds true for men and women of color in the trades, she said. She sees that changing, though, as boomers age out of the industry “because there won’t be enough of the traditional demographic of white males” to meet demand.

Murphy said she didn’t know whether annual income for women on Walsh’s construction crew is less than their male counterparts. The fact that the tenure for Walsh’s tradeswomen employees is seven years, longer than the company’s 6.3-year average, indicates that they feel well-treated, she said. “I think that’s unique for the industry.”

On the professional side of the business, Walsh actively promotes women into positions where they might oversee part or all of constructing at an apartment complex or mixed-use building, and manage budgets of $1 million or more. Today, 29 women hold some type of management role, representing about 14 percent of the total, up from 11 percent a decade ago. “We still have work to do at the executive level,” Murphy said, “but in middle-management roles is where we’ve seen an increase.”

To help more women get there, Walsh created a peer group for women project managers that meets once a month. Junior- and senior-level female employees mentor each other and use the group to share information. “I think it has really helped them feel like they have more support and resources,” Murphy said. “Periodically the general manager attends their meetings to gain a better understanding of issues and concerns they face as women in the industry. This has been particularly helpful in getting new women project managers to feel integrated.”

Walsh’s approach to the performance review process is more informal than companies that use software-based rating or ranking systems, which Murphy said helps female employees feel comfortable talking about their jobs and pay. After project managers finish a job — which could take anywhere from six to 18 months — they discuss with their bosses and other executives how it went, what they could have done better and what they’d like to do next.

“Depending on where someone is in their career, they might have owned a piece of the budget, but not all,” Murphy said. “For the next one, we’d ask them what other pieces they’d want to take on. We don’t use reviews as a way to take corrective action, it’s all about development.

“Because we have such a free-flowing conversation, it helps women feel like they’re more empowered,” she said.

Walsh also levels the playing field by having women coming into entry-level positions work on site for their first few years. Many have no experience on a jobsite, so giving them an idea of what it’s like helps them understand how a building is put together. It’s also generates goodwill for Walsh. “Many of the women we have hired from other companies have said they were typically stuck in the office and came to Walsh because they heard they could get field experience and training,” Murphy said.

Metrics-Based Pay and Promotions

Financial planning adviser Sullivan, Bruyette, Speros & Blayney relies on results, a gender-neutral interview process and the goodwill of its founders to remove biases from hiring, compensation and promotions and maintain income parity.

The McLean, Virginia-based firm, a division of BMO Financial Corp., has 45 employees, including 24 certified financial planners plus staff.

Sullivan’s advisers’ livelihood depends on how much new business they bring in and how successful they are at managing existing clients’ investments. The firm bases pay and promotions on those financial metrics, which are relatively easy to track.

“If women are performing equally well as men, they’ll be compensated equally well,” said Martine Lellis, the firm’s chief operating officer.

Lellis credits Sullivan’s top management for creating a culture that recognizes and rewards people based on merit. The three founders still active at the 25-year-old firm — the fourth, a woman, has retired — are committed to fairness in everything from hiring practices and promotions to compensation and annual reviews. “That takes us away from the culture of hoarding clients and creates more of a collaborative, collegial environment,” she said.

As the firm’s COO, Lellis manages hiring, a process that includes putting a prospect in front of an interview committee composed of male and female employees at all levels. Candidates must analyze and write about an investment case study, work that Lellis and several other advisers review, though she declined to say whether job applicants’ names were redacted to avoid any bias.

“The point is, I’m getting input from people who haven’t met the interviewee in person, so they look at it from a different angle,” she said. Everyone who interviews a candidate or reads their work is part of a debriefing session, and gives input on whether the person should be hired.

Lellis said the system works, and as proof points to employees’ tenure: an overall average of 9.35 years for women and 9.94 years for men, and for financial advisers, 16 years for women and 17 years for men.

Sullivan isn’t an anomaly. In general, the pay gap between the sexes is relatively smaller in financial advisory firms than the national average. Female advisers who are not firm owners earn 86 cents for every $1 male advisers earn compared with the national average of 81 cents, according to a November 2015 report from Investment News.

The pay gap varies by job type, with women in lower-level service adviser and support adviser jobs equaling or surpassing their male counterparts after three to 10 years of experience, according to the report. Women in higher-level financial adviser jobs were worse off, with median earnings lagging their male counterparts by 5 percent after eight to 10 years, and 6 percent after 20 to 30 years, according to the report.

Lellis agrees that the numbers, though promising, could be better. If there’s still a gap, “There’s still a problem we need to work on,” she said.

Michelle Rafter is a Workforce contributing editor.

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