Citigroup Finds Small Pay Gaps, Pledges to Close Them

Citigroup Finds Small Pay Gaps, Pledges to Close Them

In response to pressure from activist investors, Citigroup recently conducted a pay survey of its workforce in the US, UK, and Germany, which found very small (1%) pay gaps based on gender and race. In response to these findings, the company announced on Monday that it would adjust salaries to close these gaps, becoming the first major US financial institution to do so, Reuters reports:

On average, Citi found, women and minorities are paid 99 percent of what men and non-minorities are paid, respectively. Compensation would be raised based on the pay gaps identified in the survey, Citi spokeswoman Jennifer Lowney said. …

[Activist investor Arjuna Capital] asked Citi’s shareholders last year to vote in favor of a proposal requiring the bank to address the gender pay gap. But on Monday, Arjuna withdrew that proposal, saying that Citi’s announcement represented a major shift for U.S. banks and credit card companies.

Arjuna Capital, the activist arm of investment firm Baldwin Brothers Inc, has been using shareholder resolutions to push for action to address gender pay gaps at a number of large US companies, including other big names in finance and tech. Last year, Arjuna succeeded at pressuring Amazon into conducting a pay gap study, which found that women earned 99.9 cents for every dollar that men earned in the same jobs.

Read more

Video: Why Employees’ Perceptions of Pay Equity Matter

In our recent pay equity research at CEB, now Gartner, one of our key findings was that employees tend to perceive pay inequities based on gender or race as larger than they really are. These perceptions have a direct and significant negative effect on retention and morale, creating a bottom-line reason for organizations to communicate more openly with their employees about pay gaps that exist within their workforce, what they mean, and what the organization is doing to address them. Our Total Rewards team has produced the above video to help employers better understand the importance of pay equity perceptions.

Our own Ania Krasniewska also highlighted this subject in her recent overview of the five things most companies don’t realize about pay equity:

[T]he gender pay gap and pay inequality are often conflated in the public consciousness, and most employees don’t have the same nuanced understanding of group-to-group and role-to-role gaps as compensation leaders do. That means they often think pay gaps are larger than they really are or that they exist in places they don’t. In our research, we’ve found that employees tend to overestimate these role-to-role gaps and that women tend to overestimate them more than men.

Read more

Hollywood Women to Sexual Harassers: ‘Time’s Up’

Hollywood Women to Sexual Harassers: ‘Time’s Up’

On January 1, a group of over 300 women in the US entertainment business, including prominent actors like America Ferrera, Eva Longoria, Natalie Portman, and Reese Witherspoon, announced the launch of a massive, nationwide initiative to address sexual harassment, misconduct, and assault in their own workplace as well as other industries. Their effort, entitled Time’s Up, is a leaderless, volunteer-powered campaign to put pressure on employers to take action against harassment, connect victims to legal resources, and protect them from retaliation for speaking out about their experiences of harassment and abuse. As the New York Times’s Cara Buckley reported when the initiative was launched, Time’s Up is starting out with four key components:

  • A legal defense fund, backed by $13 million in donations, to help less privileged women — like janitors, nurses and workers at farms, factories, restaurants and hotels — protect themselves from sexual misconduct and the fallout from reporting it.
  • Legislation to penalize companies that tolerate persistent harassment, and to discourage the use of nondisclosure agreements to silence victims.
  • A drive to reach gender parity at studios and talent agencies that has already begun making headway.
  • And a request that women walking the red carpet at the Golden Globes speak out and raise awareness by wearing black.

Central to the endeavor is a focus not only on the rarefied world of these Hollywood stars, but also—especially—on women who lack their power, privilege, and wealth, such as domestic and agricultural workers, who suffer extensively from sexual harassment and violence in the workplace but often lack the resources to fight back. The Time’s Up legal defense fund, which has by now attracted over $16 million and counting in crowdfunded donations, will be housed at and administrated by the National Women’s Law Center and led by Tina Tchen, former chief of staff to first lady Michelle Obama, and Roberta Kaplan, who successfully argued before the Supreme Court to overturn the Defense of Marriage Act.

Read more

Will Iceland’s Move to Mandate Gender Pay Equity Work?

Will Iceland’s Move to Mandate Gender Pay Equity Work?

A new law came into effect on Monday that makes Iceland the first country in the world to explicitly outlaw paying men more than women for the same work. Under the law, the government must certify the pay equity policies of all companies and public agencies with at least 25 employees. Those that cannot prove that they pay men and women equally will face fines, Al Jazeera reports:

“The legislation is basically a mechanism that companies and organisations … evaluate every job that’s being done, and then they get a certification after they confirm the process if they are paying men and women equally,” said Dagny Osk Aradottir Pind, a board member of the Icelandic Women’s Rights Association.”It’s a mechanism to ensure women and men are being paid equally,” she told Al Jazeera. “We have had legislation saying that pay should be equal for men and women for decades now but we still have a pay gap.”

From Pind’s statement, Iceland’s law appears to apply to role-to-role gaps, where employees of different genders are paid differently for doing the same job—as opposed to group-to-group gaps, where differences exist but are based on something else like title or experience, which is what media reports often mean when they refer to the “gender pay gap.” As we know from our research at CEB, now Gartner, these gaps have different implications, while the latter is much harder for employers to close than the former, regardless of government policies encouraging pay equity.

Read more

CareerBuilder: Most Candidates Don’t Negotiate Job Offers

CareerBuilder: Most Candidates Don’t Negotiate Job Offers

A new survey from CareerBuilder points to a mismatch between candidates and employers in salary negotiations—namely, that candidates often don’t think there is one:

[The survey] found that the majority of workers (56 percent) do not negotiate for better pay when they are offered a job. Those who avoid it say they don’t attempt it because they don’t feel comfortable asking for more money (51 percent), they are afraid the employer will decide not to hire them (47 percent), or they don’t want to appear greedy (36 percent).

While most job candidates avoid negotiating, the majority of employers are expecting a counteroffer. Fifty-three percent of employers say they are willing to negotiate salaries on initial job offers for entry-level workers, and 52 percent say when they first extend a job offer to an employee, they typically offer a lower salary than they’re willing to pay so there is room to negotiate. But how much money is being left on the table? More than a quarter of employers who offer a lower salary (26 percent) say their initial offer is $5,000 or more less than what they’re willing to offer.

The survey, conducted earlier this year by Harris Poll among 2,300 employers and 3,400 full-time employees, also dug up some demographic data to inform the debate over the role of the “negotiation gap” in gender and other pay gaps. It found that employees over 35 were slightly more likely to negotiate (45 percent) than the younger crowd (42 percent), and that 47 percent of men negotiated as opposed to 42 percent of women. These differences are meaningful, but CareerBuilder’s broader takeaway is that regardless of their demographics, a slight majority of candidates are just not negotiating at all. The exception is in sectors like IT, sales, and financial services, where over 50 percent of employees said they negotiated their salaries.

Read more

5 Things Most Companies Don’t Realize About Pay Equity

5 Things Most Companies Don’t Realize About Pay Equity

Pay equity and pay gaps, especially the gender pay gap, have been drawing greater and greater attention in recent years, both among corporate leaders and in the media. As organizations ramp up their diversity and inclusion strategies, they are feeling a need to close these gaps to demonstrate that the organization is serious about not only hiring for diversity, but also ensuring that compensation is fair for women and minority employees.

However, the coverage of pay gaps in the popular press often misses key details about the problem that compensation leaders need to understand to face this challenge effectively. Here are five things you might not know about pay equity that will make a real difference in your ability to achieve it:

1) Pay Equity Actually Refers to Two Things

Pay equity issues in companies can come from two sources: group-to-group gaps and role-to-role gaps. These terms are often used interchangeably in the media, glossing over an important distinction between gaps among different groups of employees, where pay differences are based on something other than gender or race, and role-to-role gaps, where two employees are paid differently for doing the same job. In the first case, you may have women concentrated in lower-paying roles than men (such as female nurses and male doctors, or male principals and female teachers), which may reflect an unfair distribution of expectations and opportunities, but compensation executives can’t directly and immediately control for those factors (although they can collaborate more broadly to influence them). A role-to-role gender pay gap, on the other hand—male nurses earning more than female nurses—is something compensation leaders can and should address.

Both group-to-group and role-to-role gaps contribute to the pay equity problem as a whole, but it is important to recognize that your compensation strategy alone can’t solve them both.

2) The Problem Is Bigger Than It Looks

In the US, the gender pay gap is often reported at around 20 percent, meaning women earn about 80 cents for every dollar men earn (and women of color earn substantially less). At a large-scale global organization, CEB (now Gartner) research has found, the average gap is even wider: 27 percent. However, that doesn’t all reflect pay discrimination: 9 percent is attributable to choice of occupation; 6 percent to organizational factors like size, industry, or geography; and 5 percent to human capital factors like differences in education and experience.

The gap that remains unexplained is 7.4 percent, and that is the discrepancy that can be ascribed to no other factor than gender. This is the role-to-role gap—and that’s the part that rewards professionals can actually fix. HR owns this gap has an obligation to close it before it becomes a serious problem for the organization.

Read more

California Bill Would Require Large Companies to Report Gender Pay Gaps

California Bill Would Require Large Companies to Report Gender Pay Gaps

Last month, the White House Office of Management and Budget announced that it was putting on hold a rule proposed by the Obama administration in 2016 that would have required organizations with more than 100 employees to submit summary pay data to the Equal Employment Opportunity Commission each year showing what employees of each gender, race, and ethnicity earn. This reversal relieves employers of what opponents say are overly burdensome and costly regulations that would do nothing to address pay gaps.

For large employers in California, however, that relief may be short-lived. At the firm’s blog about California employment law, Seyfarth Shaw attorneys point to a piece of legislation that went to Governor Jerry Brown’s desk this week that would “require companies with at least 500 employees to compute differences between the wages of male and female exempt employees and board members located in California and file the report with the California Secretary of State,” which would then publish this information for public view:

If the bill is signed by Gov. Brown, beginning on July 1, 2019, and biennially thereafter, impacted employers will have to collect and compute:

  • The difference between the wages of male and female exempt employees in California using both the mean and median wages in each job classification or title.
  • The difference between the mean and median wages of male board members and female board members located in California.
  • The number of employees used for these determinations.

This information would then be reported to the California SOS by January 1, 2020 (and biennially thereafter) on a form categorized consistent with Labor Code Section 1197.5—the California Fair Pay Act (“FPA”).

The bill, they add, does not establish that a gender wage gap in this information is a violation of the Fair Pay Act, but opponents claim it would not need to, as it “effectively forces employers to hand over to potential plaintiffs all information they might need to file a lawsuit, without any context that would explain permissible differentials.”

Read more