An unfortunate truth is that many employers are unaware of just how severe the divergence in pay can be between employees. Unequal pay is the silent killer of organizations because it eats away at employee morale. It makes some employees feel less valued because they are doing the same job as their peers, but are paid less. It can fuel resentment towards company management.
It’s present and employers need to acknowledge the seriousness of it. If your organization hasn’t made moves towards complying with the regulations around pay equity, you may want to start taking corrective action now. It may be advisable to perform an audit to see just where your organization stands.
Take Salesforce.com (Salesforce) for example – an organization with over 30,000 employees netting over $10 billion a year in revenue. A powerhouse organization like this would appear to have all their house keeping items like equal pay in order. Guess again.
In a 60 minutes interview with Salesforce CEO Marc Benioff, it became stunningly clear just how real this issue is.
The interview starts with Benioff being asked a series of questions about a conversation he had with one of his female coworkers, Cindy Robbins. When Benioff was told by Robbins that Salesforce has an issue with equal pay, Marc stated, “That’s impossible, we have great culture here, we’re one of the best places to work and we don’t do that kind of thing.” Benioff’s initial reaction shows just how easy it can be for employers to turn a blind eye to pay equity issues within their own organizations.
Ultimately, Benioff agreed in 2015 to perform an audit on the pay scales for employees at Salesforce, making it one of the first companies in the nation to audit its employee pay to determine if gaps still existed among their employees. The self-audit found a significant difference in pay between men and women working at Salesforce with pay inequity existing across all the company’s departments. It was clearly a difficult truth to process for Benioff as a CEO. Salesforce spent $3 million to address the pay inequities among employees found by the audit.
As part of the company’s commitment to advancing equality for all, Salesforce pledged to conduct ongoing evaluations to ensure that employees performing similar work at the same level are paid consistently—and closing any pay gaps where they do exist.
Salesforce has been good to its word.
In 2017, according to information on its company website, Salesforce.com assessed the salaries and bonuses of its global workforce, grouping employees in comparable roles and analyzing compensation of those groups to determine whether there were unexplained differences in pay. As a result of the assessment, Salesforce spent approximately $3 million to address any unexplained differences in pay for 11% of its employees. A 2018 assessment found that 6 percent of the company’s employees globally required adjustments and Salesforce spent $2.7 million to address the differences between gender, as well as race in the U.S. Salesforce is expected to continue these pay equity assessments. As Benioff told 60 Minutes, “We’re going to have to do this continuously. This is a constant cadence.”
If a company like Salesforce has had issues with pay equity, what kind of pay equity issues might your organization be having? It may be time to take action as more and more states are passing legislation to toughen pay equity laws. At least 15 states are implementing stronger pay equity laws this year.
Pay disparities exist between people of different genders, races and ethnicities in the U.S. The difference now is the increasing awareness of these pay equity issues, and it’s catching many organizations off guard. Forward-thinking companies like Amazon and Salesforce have recognized the issue and are taking action before federal and state regulators tell them to do so or they are caught up in class-action lawsuits that could cost them millions of dollars. As more state, regional and municipal pay equity laws surface, the more liability there will be for employers failing to meet the requirements.
The good news is that with today’s technology, we are privy to the data that allows us to correct it. Conducting an audit of your organization’s salary structure, under the guidance of your legal department, can save you money, both from costly regulatory actions or class action lawsuits. It also can help you avoid embarrassing media coverage.
If you’re unsure of where your organization stands in regards to pay equity compliance, you should consider seeking professional guidance. Many outside law firms offer services. Even better, look for companies with regulatory expertise that also can undertake the appropriate data analysis necessary. This could reduce your costs by cutting out the extra cost of outside law firms which will not have the necessary data analysis expertise in-house and will have to hire outside assistance.
Pay equity requirements are only going to become more stringent. Stay ahead of the rest and ensure you are taking the right measures. Your employees will appreciate the effort, ensuring greater loyalty and enthusiasm at work, as will your investors, who will appreciate being spared the need to address negative regulatory action and the embarrassing publicity that comes with it.