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Does Your Company Have a Wage Gap Problem? 4 Questions to Ask Yourself

Does Your Company Have a Wage Gap Problem? 4 Questions to Ask Yourself
Credit: Fizkeys/Shutterstock

Equal pay for equal work seems like a reasonable professional expectation, but it can be far from the reality for many women and minority employees. The truth is gender and racial wage gaps are prevalent in small, mid-size and large companies in nearly every industry. Women earn, on average, $0.80 for every dollar their Caucasian male counterparts make, and that number drops even lower to $0.61 and $0.53 for African American and Hispanic women, respectively.

This gap in wages has huge implications. Not only will women earn hundreds of thousands of dollars less than their male counterparts over the course of their careers, but that gap in earnings also limits their options for everything from housing to continued education to saving and retirement planning. The wage gap becomes a compounding disadvantage at every stage for women workers, but the obligation to eradicate it doesn't rest with them. It lies with employers.

Not only do employers have an ethical responsibility to pay employees equally for the work they do, they also have a legal obligation. The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work. It also prohibits compensation discrimination based on race, color, religion, sex, national origin, age or disability.

The good that business leaders do, by eliminating wage gaps within their organizations, also keeps them on the right side of the law – and maybe even history. Of course, the fact that wage gaps based on gender and race are common doesn't always make them intentional, which is why employers need to be proactive about seeking out and correcting pay disparities within their organizations. Hypervigilance in this area goes a long way in ensuring that all of your employees feel professionally valued.

National Equal Pay Day is quickly approaching. We've compiled four questions to ask yourself when determining whether or not a wage gap problem exists in your company.

Katie Donovan, founder of Equal Pay Negotiations, recommends taking an honest look at your company's promotional history.

Before an employer conducts an in-depth audit of their pay for gaps, they may want to look at some canary-in-the-coal-mine type of indicators. One good indicator is the people who have received new titles but not raises during the past few years.  Are they mostly women, people of color or other groups experiencing pay gaps?

Also, check the breakdown of people who have received raises in the past few years. Is it disproportionately white males? Both of these relatively easy reports to run will give you an indication of a potential problem that needs further analysis.

If the numbers show that specific gender or racial groups within your organization are receiving fewer raises than other groups for the same work, then the bias, unconscious or not, needs to be corrected.  

If you are, stop this practice immediately.

Compensation determination (should be) tied to the specific job and market forces that dictate the rate of pay for that job, says Scott Cawood, president and CEO of WorldatWork. Past pay inequities should not be perpetuated in the hiring process.

Ivelices Linares Thomas, founder and chief executive officer of HR & Beyond, agrees. "By determining starting pay on previous pay history rather than paying based on the job they will perform, an organization is advertently continuing pay inequity for women, as women are traditionally paid less than men."

The best approach is to pay according to the job and responsibilities such that it doesn't matter whether it's a man or woman who holds the job, and prior disparate pay doesn't continue to follow.

The fact is, past pay has no bearing on the job you are hiring a candidate to do and is not an indication of the expertise they will bring to your company. Asking pay history questions is also illegal in 13 U.S. states, so phasing this practice out of your hiring process should happen sooner rather than later.

Of course there is, but this assumption might be part of an unfair cycle.

"Gender discrimination is not always obvious," says Jackie Dube, vice president of talent optimization at The Predictive Index. "I don't think most people are consciously aware that they're discriminating."

But it creeps up in unexpected ways, such as when we promote working dads over working moms. Or when we assign projects to a male report instead of a female report, allowing them to gain more experience, which will ultimately lead to a promotion. Over time, these subtle forms of discrimination contribute to a gap in wages.

You can (and should) put measures in place to overcome discrimination, including implicit bias training for managers. It's important that, as managers, we develop an awareness around our own unconscious biases. Bias training allows managers to be more objective in their decision-making around employees.

And that objectivity helps ensure that wage growth opportunities are shared equally within your organization.

"Men and women of all backgrounds should have the same opportunity for promotions and raises. It's often up to management to ensure each individual is fairly compensated and has the ability to thrive within the company," said Kristin Hull, Ph.D., founder and CEO of Nia Impact Capital.

Be transparent with your team to encourage open communication and the chance for each worker to negotiate or ask for a raise or promotion.

An openness on compensation topics and a stronger understanding of an organization's compensation philosophy gives employees the information they need to make informed decisions about their personal employment and compensation status.

When the roadmap for growth is clear, it's easier for employees to advocate for themselves and harder for wage discrimination to exist behind the scenes.

Charell Star

Charell Star is a digital journalist based in New York City and primarily covers tech, style, beauty, and culture. When she's not writing stories, you can find her filming and producing lifestyle segments for local TV and online media outlets.