Salesforce has been on a quest to achieve gender pay equity across its entire workforce since 2015, when CEO Marc Benioff first announced that the company had spent $3 million assessing and closing pay gaps between its male and female employees, affecting 6 percent of its 17,000 employees, or about 1,000 people. However, as Benioff told CBS’s Lesley Stahl on “60 Minutes” last weekend, he and his leadership team at Salesforce soon discovered that closing the pay gap once wasn’t enough:
Marc Benioff: We did it the first time. We were so happy with ourselves. It was great. Then all of a sudden we kind of did our audit again and the same thing happened again. We’re, like, “How can this be?” But it turned out we had bought about two dozen companies. And guess what? When you buy a company, you just don’t buy its technology, you don’t buy its culture, you also buy its pay practices.
Lesley Stahl: So they would come in and the men were paid much more and then that got eaten up into your statistics, into your audit. So you had to redo the whole thing all over again, costing as much as the first time.
Marc Benioff: It cost us as much as the first time. In total, it’s now cost us $6 million.
Lesley Stahl: Are you gonna have to do this audit every year—
Marc Benioff: More than every year. We’re gonna have to do this continuously. This is a constant cadence. You’re gonna have to constantly monitor and keep track of that, but that’s easy today. We run our company the same way every company is run with computers and technology and software. … [T]here’s never been an easier time to make this change.
In a blog post on Tuesday, Salesforce Chief People Officer Cindy Robbins provided more detail about this year’s pay equity adjustment and how the company plans to manage the process going forward, now that they have realized the importance of addressing pay gaps continuously:
We found that 6 percent of our employees globally required adjustments. We spent $2.7 million to address the differences between gender, as well as race in the U.S. The percentage of affected employees this year was cut nearly in half, down from 11 percent the prior year, despite Salesforce growing at 17 percent year-over-year. Our latest assessment shows that equal pay is a moving target, especially for growing companies in competitive industries. …
As we continue to grow rapidly — we plan to hire 8,000 employees next year — we’re looking at ways to create a system that will standardize the process for setting salaries, so new hires will be brought to parity from day one. In addition, as we continue to acquire companies and create new roles, we’re refining our job codes and definitions to make sure everyone performing similar work is compensated fairly. It’s not enough to address equal pay annually — our ultimate goal is to close the equal pay gap altogether.
Salesforce’s experience illustrates one of the key findings of our research into this issue at CEB, now Gartner: that there is no “one-and-done” solution to pay inequality. You can’t just adjust pay once and trust that pay gaps won’t re-emerge as your organization grows—especially if, like Salesforce, it merges with other organizations that have not closed their gaps. The most progressive organizations have figured out ways to conduct equity audits as an ongoing process. While this isn’t an easy problem to solve, it is also one that gets more expensive each year that you wait to act: For a typical large company, the cost of closing the pay gap next year will be roughly half a million dollars greater than it is this year.
Our pay equity research has profiled several organizations that have taken innovative and proactive approaches to uncovering, communicating, and closing pay gaps. CEB Total Rewards Leadership Council members can read all of our latest research on pay equity here.