How companies can close the gender pay gap

The gender pay gap affects women throughout their careers

On average, women in the United States are paid 20% less than men. As a result, the average woman misses out on $530,000 over the course of her career. Learn more This gender pay gap is wider in higher-paying industries and roles. Learn more

If we closed the gender pay gap, the average Black woman would earn $880,000 more over the course of her career, and the average Hispanic woman would earn over $1,000,000 more. Learn more

Closing the pay gap isn’t just the right thing for companies to do. It’s the smart thing to do.

Employees who are paid fairly are more committed

When employees believe they are rewarded fairly for their work, they are more likely to put in extra effort and pitch in to help their coworkers. This higher level of commitment can lead to better job performance. Learn more In contrast, when employees think they’re underpaid, they are more likely to look for a new job, Learn more and attrition costs companies money and valuable institutional knowledge.

Equal pay matters to employees

A vast majority of American voters believe women should receive equal pay for equal work. Learn more Moreover, equal pay is critical for attracting employees: almost 50% of college students say an employer’s commitment to equal pay would influence their job choice, Learn more and 8 in 10 women say they would not pursue a job at a company known for unfair pay. Learn more

Four steps companies can take

Gender equality is critical for organizations that want to perform at the highest levels, and it requires paying women and men fairly for their work. Here are four steps your company can take to close the gender pay gap.

1.

Conduct a pay audit

Awareness is the first step to solving a problem. Analyze compensation by gender and race so you can see and address pay gaps. In addition, be explicit about how your organization determines compensation so employees don’t have to guess what factors are driving their pay.

Only 58% of companies track salaries in comparable roles by gender, and only 34% track bonuses by gender. Learn more

2.

Ensure that hiring and promotions are fair

Audit reviews and promotions regularly to ensure your company is not systematically rating men more highly and promoting them more quickly. Train managers so they understand the impact of gender bias on their decision making, and put clear and consistent criteria in place to reduce bias in staffing decisions and performance reviews. Learn more

Although 93% of companies report that they use clear and consistently applied criteria to evaluate performance, only 57% of employees report that their managers do this in practice. Learn more

3.

Make sure women have equal opportunity for advancement

Women typically receive less feedback on their performance, get fewer high-profile assignments, and have less access to mentorship and sponsorship. Make sure the women in your organization have equal access to the people and opportunities that accelerate careers and are not saddled with a disproportionate amount of “office housework,” such as organizing events.

Despite asking for informal feedback as often as men do, women receive it less frequently. Learn more

4.

Make it a norm for women to negotiate

We expect women to be giving and collaborative, so when they advocate for themselves, we often see them unfavorably. This social pushback can negatively affect the results of women’s negotiations — and their careers. Make sure the women in your organization are encouraged to negotiate and applauded, not penalized, when they do.

Women who negotiate are more likely than men who do to receive feedback that they are “intimidating,” “too aggressive,” or “bossy.” Learn more

Learn more about the pay gap

When you control for important factors such as education, experience, industry, occupation, role, and hours worked, the pay gap still exists.

Learn More

What individuals can do

There are simple things both women and men can do every day to celebrate and advocate for our female coworkers.

Endnotes

  • 1 Institute for Women’s Policy Research, Status of Women in the States: Employment and Earnings (March 2015). https://statusofwomendata.org/explore-the-data/employment-and-earnings/employment-and-earnings/
  • 2 Ariane Hegewisch and Emma Williams-Baron, "The Gender Wage Gap by Occupation 2016" (April 2017), Institute for Women's Policy Research. https://iwpr.org/wp-content/uploads/2017/04/C456.pdf
  • 3 National Women's Law Center. "Equal Pay for African American Women," (August 2016). http://nwlc.org/wp-content/uploads/2016/08/NEW_Equal-Pay-for-African-American-Women.pdf; National Women's Law Center & Labor Council for Latin American Advancement, "Equal Pay for Latinas," (October 2016). http://nwlc.org/wp-content/uploads/2016/10/Latina-Equal-Pay-2016-English-Final-2.pdf"
  • 4 Peggy Cloninger, Nagarajan Ramamoorthy, and Patrick C. Flood, "The Influence of Equity, Equality and Gender on Organizational Citizenship Behaviors," SAM Advanced Management Journal 76 , no. 4 (2011): 37–47.
  • 5 David Card, Alexandre Mas, Enrico Moretti, and Emmanuel Saez, "Inequality at Work: The Effect of Peer Salaries on Job Satisfaction." The American Economic Review 102, no. 6 (2012): 2981–3003.
  • 6 Make It Work Advocacy Group and Lake Research Partners, 2015 poll. http://www.makeitworkcampaign.org/wp-content/uploads/2015/02/MIW-SOTU-Poll-Memo.pdf
  • 7 Equality and Human Rights Commission, Equal Pay—A Good Business Decision (December 2011). https://www.scribd.com/document/99875261/Equal-Pay-a-Good-Business-Decision
  • 8 Glassdoor, Global Gender Pay Gap Survey: United States, Canada, United Kingdom, France, Germany, The Netherlands, Switzerland (2016). https://press-content.glassdoor.com/app/uploads/sites/2/2016/02/GD_Survey_GlobalGenderPayGap.pdf
  • 9 LeanIn.Org and McKinsey & Company, Women in the Workplace 2016. https://womenintheworkplace.com/
  • 10 Ibid.
  • 11 Ibid.
  • 12 Ibid.
  • 13 Ibid.

Photo credits Thomas Barwick/DigitalVision/Getty Images; David Lees/DigitalVision/Getty Images; Hero Images/Hero Images/Getty Images.