The gap you can’t ignore

Inspired by what Erica Baker did while at Google, we sought to explore what happens if we talk about our salaries in the open. And we asked you to talk about it as well, through the survey. Can transparency about salaries clear the air about why employees earn what they do? Can it help address the sticky issues around women’s pay?

Report after report claims that the gender pay gap is real. Just earlier this week, the Monster Salary Index said that men in corporate India made 25% more than women. Even our limited sample data points to that.

But at the same time, consultants we spoke to point out that there is no conscious bias that companies have when it comes to employees’ salaries. Undeniably, though, a slew of factors from a maternity break to fewer jobs changes, all drive a wedge between the salaries of the sexes. And then there is the question of negotiation skills, which many women grudgingly admit, they lack.

The Feelings

“I was happy when I joined as an assistant manager at a salary of Rs 45,000 per month. But a month later, my friend (male) from the same business school with similar experience joined as a manager at nearly double my salary. When I raised the issue with HR, I was told that the decision was made, and there was nothing they could do. The HR tried to justify with some explanation about the relevance of experience, which was not justified as we had similar experience. It was much later that I found out that he had negotiated far more forcefully than me and ended up with a much better position and salary,” says a Delhi-based 31-year-old marketing manager at an Indian retail company.

While it is true that a pay gap is introduced by the choices women make, knowing why it exists can make a world of a difference when it comes to judging whether women or for that matter even men, feel fairly paid.

Our survey showed that 55% women and 44% men felt that they were underpaid. And that feeling kicks in mostly after spending four to eight years in an organisation. Over 40% of those who felt that they were underpaid worked in mid-management.

For the HR fraternity reading this, this is an early warning sign of low engagement.

“This means that there has been no clear communication of how the company has rewarded its employees. It also shows that the employees and managers are benchmarking their salary in very different ways,” says Sandeep Chaudhary, chief executive officer of Aon Hewitt, an HR consultancy firm.

If employees have an idea of what their peers and colleagues earn, they would be better placed to assess their own salaries. And this brings us back to the point of transparency.

Indian companies are becoming more transparent thanks to mandated corporate governance norms. The remuneration details of the CEOs are known, and details of individuals who earn more than a crore are disclosed. So how can more transparency hurt?

As Chaudhary says, “Transparency [in salary] is good for both men and women. Depending on the maturity of the workforce, transparency can help bust the myth of the gender disparity in pay.”

And bust it does. As this piece in the New York Times points out, companies like PricewaterhouseCoopers (PwC) in Britain have tried being transparent about the difference in wages. And it revealed what caused the gap.

Variations

It found a 15.1% pay disparity, which was a result of fewer women being in senior positions. Having uncovered the problem, it dug deeper and evaluated its promotion policies. What it saw was telling. In 2013, even though PwC had 30% women in the grade just below that of a partner, only about half of them were promoted.

Not just that, there also seemed to be a pattern wherein men received more bonuses than women. While the men who were not promoted were given retention bonuses, women weren’t offered any. The men who threatened to leave got one, whereas the women made no such demands.

Similarly, in the US, a tech startup called Buffer created a list of the salaries of all its employees and put it out for everyone to see. It uses that information to identify areas where it can improve.

 

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