• Emily Howe

Don't Waste Time Measuring Pay Gaps

Updated: Apr 4, 2019

Companies are rightly concerned about the gender pay gap and many are asking “What is our gender pay gap, and how does it compare?” Although it sounds like the right place to start, and we certainly stand strongly for “equal pay for equal work”, measuring a company’s pay gap is not often actually helpful in truly fixing pay disparities.


This piece details why you should think twice about wasting valuable resources trying to measure your company's pay gap and how you could better use your energies to more directly (and immediately) impact the root causes and indicators of pay inequities. 

Think twice about wasting valuable resources trying to measure your company's pay gap and how you could better use your energies.

PAY GAPS ARE—IN PRACTICE— ALMOST IMPOSSIBLE TO ACCURATELY MEASURE


For any measurement to be useful for decision-making and resolution planning, it needs to be seen as accurate so decision-makers can agree on new directions with confidence (not to mention being able to re-measure in the future to track progress). The problem is both fact and perception—the fact that accurate adjustments for apples-to-apples work is very difficult, and the fact that people perceive it is imprecise. The reality is that pay gap metrics do get people’s attention, and so leaders may say “well, even if its imprecise, let’s go ahead and do the measurement and see what it says.” But as a result, even if the metric generates an initial splash, people are quietly saying to themselves “yeah, but…” so it doesn’t actually help the organization make hard choices and behave differently.  


The problem in pay gap analysis is in trying to “level” or “normalize” white-collar work. In most corporate, managerial, and creative professions, you can’t create clear apples-to-apples comparisons between work. And therefore you can’t tell if there’s a meaningful gap. Many firms that do pay gap measurements are frankly selling snake oil. Although they claim to normalize on a lot of factors, most organizations don’t have the data that documents enough of the skill differences, lateral moves or scope of responsibility differences to enable accurate normalization. Adjusting for individual differences in project load, client load, the complexity of responsibilities, etc. requires far more intensive analysis than most firms (or internal teams) are going to do, and yet they can swing a pay gap measurement by enough to make it useless.  

Many firms and consultants who do pay gap measurements are frankly selling snake oil. 

Even if you do reach consensus that one role should indeed have a lower salary than another similarly titled role, it's highly unlikely you'll be able to agree on objective support for how much less complex/tough/demanding one job is (i.e. is leading X department 15% more difficult and therefore worth 15% more).  That’s an issue that few people who are "experts" in pay gap analysis talk about.


There's another big problem with looking at pay gaps. Let's say that you're trying to accurately normalize for pay differences due to legitimate differences in the responsibilities between similarly-titled employees. Pretend there are 10 employees, and the eight that have the largest portfolios of responsibilities (and therefore receive the highest compensation) are all men. When you normalize and look at the pay gap, those two women would count as being paid equitably because they have the smaller portfolios, and you might entirely miss the real question being highlighted by the data, which is why only men seem to be given the larger portfolios.


While at first blush, measuring a company's pay gap can seem like a good way to show that you take workplace gender bias seriously, in reality, it actually wastes time and resources that could be focused on resolving actual on-the-ground gender issues.


AND, FINDING A PAY GAP DOESN'T HELP YOU FIX IT.

Pay gaps are the result - not the cause - of workplace gender issues; they indicate deeper issues that have accumulated to produce pay disparities. In fact, while pay equalization efforts come from a good place our point is that they shortly leave companies with the same wage gap again - because the underlying issues that lead to a pay disparity (like under-promoting qualified women or overlooking talented women for high-prestige "stretch" projects) will be still there if left unaddressed. 

Pay gaps are the result - not the cause - of workplace gender issues.

Consider these very common additional examples. We've all seen the research that shows that men negotiate for and win higher starting salaries; what's also worth noting is that these days women are asking for high starting salaries (due in part to Sheryl Sandberg's book "Lean In" that encouraged us to), but women face more pushback then their male peers do. (McKinsey & Co and Lean In. Women in the Workplace, 2017).


Another male salary boost comes in the form of senior men retiring and most frequently leaving their thick and lucrative client portfolios to younger men, not women. Both behaviors directly lead to men making more money than women with their same education, experience, and background. This common occurrence disadvantages corporate women, but the second example wouldn't be uncovered as a bias in an apples-to-apples pay comparison: the man would simply have a larger portfolio and would be seen as "deserving" his higher earnings.


ADDRESS UNDERLYING ISSUES THAT CREATE WAGE GAPS.

To reduce workplace gender bias – including resulting pay gaps - companies must identify, address, and measure the behaviors, norms, attitudes, and policies that disadvantage working women. These underlying issues are not only the root causes of the pay gap, but they also create a cultural foundation where disrespect, mistreatment, harassment, and other even more severe abuse are likely.


To truly combat the gender issues that lead to a pay gap, and to create a place where ambitious, talented women thrive, a multipronged approach is necessary.

To create a place where ambitious, talented women thrive, a multipronged approach is necessary.

Organizations that take gender equity seriously - and make real progress - need to engage several groups to play crucial and intertwined roles to re-shape corporate policy, company and team culture, and managerial and individual biases.


Written by Emily Howe and Tim Gallagher.



Copyright © EMMH, LLC, 2019.


Written by Emily Howe, Corporate Gender Strategist; leader of the Executive Women's Forum at the Commonwealth Club, San Francisco; coach for ambitious women in male-majority fields; expert media source/writer/speaker on workplace gender inclusion; and founder of the American Association of Corporate Gender Strategists.


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©2019 American Association of Corporate Gender Strategists