Forecast 2018: Gender diversity and pay

December 12, 2017
Greta Guest

EXPERT Q&A

Cindy Schipani is a professor of business administration and business law at the University of Michigan’s Ross School of Business. Her primary research interests are in the area of corporate governance, with a focus on the relationship among directors, officers, shareholders and other stakeholders, as well as pathways for women to obtain positions of organizational leadership.

Q: When do you think we’ll see Equal Pay Day occur in 2018?

SCHIPANI: I hope the day moves up to at least sometime in March. Equal Pay Day occurred on April 4 this year. This is the day when the average woman has made up for salary losses due to gender-based pay differences. Put another way, women needed to work slightly over three extra months to catch up with men’s salaries. The day fell on April 12 last year.

The pay gap is only one example of stubborn, gender-based disparities that still exist in the workplace despite the anti-discrimination measures of Title VII of the Civil Rights Act of 1964 and the Equal Pay Act, which have been on the books for over 50 years.

Q: What are some of the ways that corporate boards of directors and executive positions could become more gender-diverse?

SCHIPANI: Although the work environment for women has improved because of these laws, pathways for women to C-suites are still elusive. For example, women were president or chief operating officer of only 13 S&P Fortune 500 Companies in 2016; this is up from nine in 2006. A better path to diversity in the C-suite could not only help the firm’s financial performance; it can also help employee retention and begin to address the persistent gender-based disparity in pay.

Business can address the disparity through mentoring and networking programs. Access to networks and mentors has proven to play a crucial role in climbing the corporate ladder. It could also give women an opportunity to dissociate themselves from baseline negative presumptions. Even if this sharing of cultural capital does not completely erase the negative associations of marital status on women’s organizational position, it is surely a step in the right direction.

Because women are generally classified as outsiders by those on the top rung of corporate leadership, integrating mentoring programs between those at the top and those a few steps down will expose both parties to the values, beliefs and assumptions of the other. Mentoring at the higher levels can also help prepare women for leadership positions in the C-Suite and on boards. Mentors could help train women on the art of negotiating salaries.

Q: How can businesses take action in 2018 to erase pay disparity between the genders?

SCHIPANI: Business could also address the issue by being more transparent about salaries. Studies have found that transparent pay conditions tended to reduce the gender pay gap. Perhaps the easiest is to make it clear that discussing salaries between workers is allowed. When employers have encouraged such discussions or provided information about pay scales, many misconceptions about pay are corrected.

Another proposal is for businesses to ignore past salaries when hiring in order to avoid reproducing previous disadvantages. To the extent past salaries were discriminatorily low, it is important to avoid using those salaries as a base in recruiting job candidates. Instead, some companies are beginning to evaluate the pay based on what the position is worth to the company rather than on the last salary of the recruit.

These inequities are important not just to women, but to society as a whole. For example, a large number of homeless families are headed by single, working women. Greater equity for women would help reduce the homelessness crisis.

 

Contact Schipani at 734-763-4173 or by email: schipani@umich.edu.