Why Companies Like Salesforce Differentiate on Gender Pay Equity

By Emilee Regan

Women's Equality Day (August 26) marked 97 years since women in the United States were granted the right to vote. But when it comes to establishing a holiday to commemorate the elimination of our gender wage gap, the outlook is bleak.

Government support and intervention have guided past corporate efforts in this area, but today it seems we are veering off the path toward gender parity. In March, President Trump signed an executive order revoking the Fair Pay and Safe Workplaces Executive Order signed by President Obama in 2014, which helped prevent companies from discriminating against women on their payroll. The White House-led corporate equal pay pledge has been moved from WhiteHouse.gov to the archives. And the Administration's own payroll appears to bring its philosophy to life: an analysis last month from conservative think tank American Enterprise Institute reports a 37 percent gender pay gap at the White House, up from 11 percent in the Obama White House's final year. (That means the typical female White House staffer is earning 62.3 cents per $1 earned by a typical male staffer.)

Many of our global counterparts are exploring solutions to the problem through legislation. Most notably, Iceland is poised to become the first country in the world to require that companies prove pay equity, with a bill expected to be made law in 2018. The law would require private companies and government agencies to go through audits and receive certification that equal pay is provided, or face fines. (Interesting side note: 50 percent of lawmakers in Iceland's parliament are women). In the UK, employers with 250 or more employees must publish their gender pay gap on their public-facing website and report their data to an online government database by April 2018, a policy that is already spurring corporate action (and public outrage).

In the absence of government regulation here in the U.S., 63 percent of Americans are hopeful businesses will take the lead to drive social and environmental change. And 84 percent of Americans want companies to address women's rights specifically. So how can socially-responsible companies differentiate themselves among corporate peers who are quick to sign on to the notion of equal pay for equal work, but resistant to the transparency required to actually prove it?

1. Understand the important difference between championing pay equity and paying equally, and expect your stakeholders will too.

Of course companies are quick to support pay equity! The risk, however, lies in not being able to back up your claims of support with business practices. Consumers are becoming increasingly savvy about corporate claims versus reality – 76 percent of millennials say they will do research to determine if a company is being authentic when taking a stand on a social or environmental issue.

Audi's "Daughter" Super Bowl commercial is a prime example of consumers wanting to look under the hood to investigate the credibility of a company's stance. The ad features a father as he watches his daughter compete in a cart race, and questions how he should explain to her that she won't be valued the same as her male peers throughout her life. The ad ends with an on-screen message: "Audi of America is committed to equal pay for equal work."  The day after launching online, the 60-second ad had garnered more than 2 million views on YouTube, as well as more than 18,000 negative comments, compared to 1,110 positive comments. While the majority disagreed with the politics of the ad, others included: "Please release the average female wage and average male wage at your company… Your response will have a direct bearing in my decision to buy an Audi, ever," and "Do I tell my daughter that the board of directors of Audi are all men?" Audi does not discuss its efforts to achieve pay equity on its sustainability website, nor does it disclose salary ratio by gender.

Beyond consumers, sustainability reporting frameworks and rankings want transparency on pay, too. The Dow Jones Sustainability Index asks participating companies to disclose average male and female salaries at executive, management and non-management levels. The RobecoSAM Global Gender Equality Impact Equities Fund weights equal remuneration heavily in its investment decisions. And GRI Standards ask organizations to report the ratio of the basic salary and remuneration of women to men for each employee category.

2. Back up claims of equality with evidence and learnings. You don't have to be perfect, but you do have to be honest.

91 percent of Americans say it's okay if a company is not perfect, as long as it's honest about its efforts. Companies should not let the existence of a pay gap delay their transparency.

In 2015, Salesforce undertook an audit of 17,000 employee salaries to determine if men and women were paid equally for comparable work. In 2016, the company shared its methodology, the findings (6 percent of employees required a salary adjustment) and the resulting action ($3 million spent to eliminate statistically significant differences in pay, as well as a new leadership program and parental leave policy). In 2017, the company provided another update. In each communication on the topic, the company acknowledges there is a pay gap, and then details actions it will take to close it. Salesforce ranked #8 on Fortune's list of best companies to work for in 2017.

3. When you do take action, don't miss the opportunity to engage your employees.  

Research shows that social commitments are key drivers in recruitment, retention and loyalty for today's workforce. The Financial Times is a cautionary tale for companies who choose not to engage with their employees on this issue. Its union has threatened a strike after concerns related to the organization's 13 percent pay gap were not taken seriously by management.

And Salesforce's own research specifically looked at the impact of equal pay on employee engagement: employees are 2.2 times more likely to say they're proud to work for their company if that company cares about closing the gender pay gap. If you do undertake a process to assess and address pay disparities, be sure to take your employees along for the ride.

As women's advancement and equality in the workplace become increasingly relevant and important topics, companies should get ahead of expectations for transparency. Corporate leaders in the space will not only mitigate risk associated with shareholder resolutions and activist pressure for disclosure, they'll also reap the reputational benefits of taking a credible stance on an important issue for their stakeholders.

Emilee Regan is a Senior Account Supervisor at Cone Communications and works on the Corporate Communications team with client experience. She has supported reputation and issues management work for several major consumer brands and has worked with clients on a multitude of stakeholder engagement campaigns, message development and issue research and analysis.

Image credit: Cone Communications