Equal Pay Makes Good Business Sense
Any good leader knows that if you want to solve a problem, you first have to know you have one. But when it comes to equal pay for equal work, even the best corporate citizens are often unaware that they may have a pay gap problem.
In our 21st Century economy, businesses have more tools at their disposal than ever before to better understand our world – to analyze markets, recognize patterns, and make changes when the data prove problems exist.
When I speak with business leaders, they often point to the effective use of good data as one of the key drivers for success. Yet while businesses have made incredible progress in better understanding their customers, they often lack basic information about their own internal practices, which can make it harder for them to compete for and retain the best talent. Although many business leaders want to do right by their workers – who will in turn do right by them – the lack of data too often allows unfair pay gaps to persist undetected.
Marc Benioff’s leadership of Salesforce is a great example of what’s possible when a business leader discovers a problem, and addresses it. Marc has always believed that it is good business to be a good corporate citizen. So it came as a surprise when two women on the Salesforce executive team suggested there may be a gender pay gap at the company. What he did next is a true testament to his basic values.
Marc immediately took steps to review the salaries of more than 17,000 Salesforce workers. The assessment showed that there was a need to adjust some salaries for both men and women. Seeing the data and recognizing the problem, Salesforce is spending $3 million on closing the gap so that men and women are paid equally.
For years, companies across the country have been required to report basic information about their business and workers to the Equal Employment Opportunity Commission (EEOC), which was set up in 1964 to prevent discrimination at work. But they have not been required to collect data that would enable them to take a comprehensive look at their pay practices in the way Salesforce did.
Today, the EEOC announced a new proposal to change that, which would require businesses to take a snapshot of their pay practices by gender and race, and then report it to the EEOC. Critically, company-specific information will not be made public. The policy isn’t about publicly shaming businesses – it’s about ensuring those that want to do the right thing collect the right information so they can bridge a pay gap if they discover one. This applies to U.S. companies with more than 100 workers. Exactly seven years ago, the President signed his first bill into law – the Lilly Ledbetter Fair Pay Act, which made it easier for women to challenge pay discrimination in court. Today’s announcement builds on the progress we’ve made.
Now, make no mistake – the persistent gender pay gap in our economy is a complicated challenge. A big part of the problem is the fact that too often, women are paid less than men to do the same job. But it’s not the entire problem. From lost income due to raising children, to unfair norms that penalize women for negotiating their salaries, to a lack of access to STEM education at an early age, we have a lot of work to do to fully bring fairness to our businesses. Yet what we do know is that companies can take an important step forward by understanding the reality that their workers face and acting decisively to rid discrimination – even if it is unintentional – from their workplaces. And with the Obama Administration policy, we can take an important step forward.
In the 21st Century, we need to ensure working families can thrive in both the workplace and at home. That’s the only way our economy can remain resilient and compete in the global marketplace. And it’s the only way we can stay true to our founding ideals of fairness and equality. From business owners, to managers, to the workers who make ours the most productive economy on Earth, we should all expect to be treated fairly.