Last week we celebrated Equal Pay Day, the symbolic day that illustrates how far into the year a woman must work to earn the same amount made by a man in the previous year. Last month, an article published on the Bloomberg Business blog cited research showing that the gap at the most senior levels in business is even wider.
The article attributed the chasm to differences in incentive compensation. Researchers at the Federal Reserve Bank of New York and colleagues in academia found that men in top executive positions leverage their networks to get significantly higher incentive compensation payouts. Essentially, the article argues that women at the top get there without building the same entrenched networks built by their male counterparts. (In my mind, the article raises some ethical questions about whether we want male or female leaders to be able to “hold board captives and are able to set the terms of their own pay,” but that’s a topic for another blog post.)
One of the researchers advised that transparency in organizational pay is the key to addressing the problem. I don’t disagree, but I also don’t think women should wait around until their boards decide to internally disclose compensation details and disparities. In reality, women have opportunities to impact both the pay differentials and the lack of transparency.
A lot of people, including lawyers, overlook the fact that the National Labor Relations Act provides protections even to employees who are not represented by a union. If two or more employees join together to address their employer about improving their pay, they are engaged in protected activity under the Act. The problem stems from the fact that women at the lowest or even just lower levels of organizations are often either uninformed of their rights or too financially vulnerable to speak out. And, women at the most senior levels in business have fiduciary duties that may conflict with the cause, so to speak.
Women in positions better able to absorb the risk are going to have to join forces, start talking about their pay and start asking their employers, or even their male colleagues, what men are earning and why. And, knowing salaries is not enough. Incentive compensation has to be addressed early on.
To be clear, I am not advocating that pay should be equal at all levels. Performance differentials should rightfully impact compensation. But, exposing current compensation differentials will put organizations in the position of explaining how the differentials are determined. Performance metrics, and not race or gender, should influence compensation differences. I actually believe that most organizations want this to be the case. But, just like networks can be entrenched, biases can be too. Starting the conversation with your colleagues might just be the way to help your employer get to where it wants to be; rewarding performance.