“Equal Pay!” chanted the crowds in New York at the victory parade. The U.S. Women’s Soccer Team had just electrified the world with their fourth consecutive World Cup Championship. And they challenged the conscience of the world by demanding “Equal Pay,” compared to men.
Why should they get “Equal Pay?” Because they earned it. Not only did they outperform the men in world-class competition, but they also brought in $50.8 million in revenue, while the men’s team brought in $49.9 million.
Two High-Tech Companies Respond
A similar story unfolded in two high-tech companies: Xactly and Salesforce.
Back in 2014 Xactly data scientists analyzed the performance and compensation histories of hundreds of thousands of salespeople who work for their clients. The anonymous analysis controlled for seniority, position level, and other possible influencing factors. They found that women had a three percentage point edge over men on quota attainment but were paid 17% less.
Why should saleswomen get equal pay compared to men? Because they earn it.
How does a free labor market allow this discrimination to occur? Could it be cultural bias subordinates women? Could it be male sales executives subconsciously hire people who “look like them?” Could it be that sales forces are old boys’ clubs?
Who cares? It’s wrong. Stop it!
When Xactly’s CEO, Chris Cabrera, saw the results of the cross-company analysis, he doubted Xactly had pay discrimination because he had always set a tone emphasizing fair pay practices. But he had never analyzed it rigorously, so he asked Xactly’s HR department to apply the same methods used by the data scientists. They found Xactly had gender pay bias too. Cabrera was surprised, but there it was. Undeniable bias in male versus female sales compensation.
Cabrera asked, “How could this happen? Was it embedded in the high-tech labor market? Was it a broader cultural bias against women? Did sales executives tend to hire more experienced males and less experienced females?”
While he wanted answers to these questions, he was even more interested in corrective action and progress. For Cabrera, the conclusion was simple: Paying women less than men for the same work is wrong and it does not make good business sense, so he put Xactly on a path to stop doing it.
Cabrera changed Xactly’s recruiting procedures, their sales management and promotion processes, and he had HR regularly and consistently measure the extent of any pay bias. Their results demonstrate rapid progress toward equal pay at Xactly.
Similarly, Salesforce’s CEO, Marc Benioff thought he and his company were practicing fair policies. But he wanted the facts, so he had HR examine the compensation of his salespeople. When the facts came out, the bias was again clear. So, Benioff committed $3,000,000 to set his firm on a path toward gender equality.
Suppose you also have a gender pay bias, and it is going to be an expensive fix. What factors will justify spending time on getting the facts for your salesforce and taking the needed steps to fix it? In other words, what makes equal pay good for business?
Equal pay advantage #1: Increase A-players.
Recruiting top-performing women and paying them fairly increases their retention and motivates them to deliver top results. If you only recruit top men, you cut your prospects in half. If you don’t pay your top women fairly, you encourage their turnover, which obviously hurts customers and your results.
Equal pay advantage #2: Women win.
The U.S. Women’s Soccer Team demonstrates how women can be just as aggressive, competitive, and committed to doing whatever it takes to win. Xactly’s research proves this is true: women are slightly better performers than men.
Equal pay advantage #3: Diversity wins.
Diversity breeds creativity. Mono-cultures become sterile, make mistakes, and eventually lose. World Bank data show improved gender parity increases political stability, reduces the likelihood of violent conflict, and increases economic performance.
Try something like this: Go to Singapore where discrimination is illegal. Sit in on a business team comprising a Malaysian, an Indian, a Chinese person, a British ex-pat, and an American ex-pat. You’ll marvel at the number of different issues raised and the variety of solutions proposed. It will be much more creative than the same meeting in New York.
Equal pay advantage #4: Fairness wins.
Get a reputation for being a good place for women to work, and you will have an advantage in recruiting the best long-term prospects (Millennial and Gen Z men and women) and keeping the best performers.
Equal pay advantage # 5: Healthy cultures win.
Your culture will be more equitable, hence more attractive for winners—both women and men.
Pay inequality is widespread, and it needs to end. Fixing it is good business, and good for society. Take decisive action by committing to five steps:
- Get the facts. Have HR do a rigorous study comparing women’s pay and men’s pay controlling for seniority, and position level.
- Set goals. Set a hiring quota of 55% women and 42% men and 3% other and set the goal of equal pay for all groups. Or, set your own targets and move toward a diverse and fairly paid workforce.
- Improve recruiting practices. Have HR create gender-neutral recruiting ads and interview scripts. Have every candidate interviewed by all genders.
- Measure progress. Review progress toward your fair hiring and pay target quarterly. Track changes in salesforce productivity and compare to gender balance and equal pay.
- Celebrate your achievements. Recognize or pay bonuses to managers and executives who help move the needle and achieve your fair pay targets.
It Takes Courage
It took courage for Cabrera and Benioff to get the facts, uncover bias in their organizations, and take action to eliminate it: The kind of courage that makes a CEO great.