Ban salary negotiations for equal pay

Ellen_Pao_2015After unsuccessfully suing her Venture Capital firm employer for sexual discrimination, Ellen Pao – darling of the Silicon Valley feminists, has now resigned as interim chief executive of Reddit. Pao, who had been at the company only eight months, put every effort into ridding Reddit of harassment. Pao made it one of her first moves to ban salary negotiations at the social media company. Burned by her own experiences, she seeks to eliminate gender bias. Many question the utility of this option, saying women should be able to negotiate their salaries as well as any man. In an ideal world, this would be true. However, research routinely shows even if we teach women to ‘negotiate like a man’, it’s not a great idea as we then penalise them for it, by describing them as ‘unseemly, selfish or shrewish’ when then do. In fact, other research from 2012 showed American men were more likely to give a better deal to women who flirted and flattered than women who adopted a gender neutral ‘let’s get down to business’ approach.

A follow-up study by business professor Laura Kray, found that type of ‘feminine charm’ worked because it put me in a more positive mood. Negotiating salary and other benefits makes the assumption that top talent want that type of approach. Kray however, found that undergraduate business students, particularly the women were turned off by the idea of working for companies that sacrificed fairness for profit. So a ’no negotiation’ policy may work best, particularly if you want to attract people who have historically been disadvantaged by salary negotiations; women and ethnic minorities.

As Kray wrote in the Washington Post: ‘A no-negotiation policy implies that an employer pays based on a job’s market value, rather than based on a job’s actual market value, rather than based on subjective individual characteristics. Laszlo Bock, chief of people operations at Google, recently extolled the virtues of this principle for eliminating the pay gap. Even making offers based on an individual’s salary history can perpetuate the problem, he noted. ‘We figure out what the job is worth, not the person,’ he said during a talk in Washington.’ Pao’s solution may be unconventional and will almost certainly continue to ruffle feathers, but we like that’s it’s an attempt to solve a real-world, rather than ideal world problem.

No money for pay rises? Increase engagement without increasing wages

Our sister company, The InclusIQ Institute, wanted to share their popular article with us. We see successful leaders who keep employees happy by giving them regular raises and promotions. However, as monetary reward is only a small part of why people work, we are impressed by leaders who are able to motivate teams even during the lean periods – when raises are impossible to give.

Here are the factors they focus on:

  1. Consistent Values: We can’t visit the lobby of a corporate client without seeing a banner proudly proclaiming their values. However, in sessions, the employees confide core values are abandoned during tough times. Leadership values seemed to apply in good times, but dwindle or even disappear during times of stress. Employees put in more if company values are followed at all times – even if it calls for tough decisions.
  2. Long Term Focus: Ace teams see the tough periods; belt-tightening and cash flow issues as a temporary problem. Their leaders maintain focus on long-term objectives. Employees don’t mind going through difficult times when they believe there is a brighter future ahead.
  3. Continuous Communication: As a Forbes article on ‘Seven Ways To Increase Employee Satisfaction Without Giving A Raise‘ comments: “People tend to communicate less during bad times, when in actuality, they need to communicate even more.” During tough times, good teams increase communication and share important information. Apart from any good news, it is also important to share the reality of the current situation with team members. No one likes being condescended to; they can handle the truth.
  4. Opportunities for Development: Successful teams use slower times to learn new skills and build new capabilities. Leaders should not cut training and development as encouraging employees to take up stretch roles boosts employee satisfaction and inspire loyalty.

Good leaders know that if you can’t walk your talk – why should anyone else? How have you seen strong teams cope well during a down period?

The MBA Myth: Are women better off without?

 

291Women pursuing careers in management often approach me with the  question – will an MBA advance my career? While, at Female Breadwinners we do encourage many women to study further, it’s not the easy fix towards equality many assume. Most management skills are learnt on the job, rather than in school. Besides, in the long run, most women simply can’t afford to put their careers behind by at least 2 years and the hefty financial investment. For example, at Harvard an M.B.A. costs more than a hundred and eighty thousand dollars before lost wages. Arguably, it’s the qualities that get a candidate admitted to Harvard, rather than her degree itself, that insure her success after graduation. Even when they get there, there will be few role models in the coursework as only eight percent case studies feature female protagonists.

The uncomfortable truth is women in business are more likely to have their careers interrupted because of family considerations. A Harvard Study on the dynamics of gender gap for young professionals in the corporate sector mapped the careers of business school graduates from 1990 to 2006. They found that a decade after earning their M.B.A.s, women were 22% more likely than men to have experienced at least one career interruption. Just over 13% of women weren’t working, compared to 1% of their male colleagues. The study also found that “M.B.A. mothers seem to actively choose jobs that are family friendly and avoid jobs with long hours and greater career advancement possibilities.”

Laura Hemphill of the New Yorker wisely points out – “Given this possibility, isn’t the most important thing for a woman to work as hard as she can and advance as far as possible while she’s still in her twenties and her life is as uncomplicated as it’s going to get? That way, by the time she’s a decade or so along, she’ll have more savings, more job experience, and more bargaining power—all of which translate into more options.” An M.B.A degree is certainly not the obvious or even smart choice for all.

Do bonuses create deceitful employees?

Crossed fingersIn the last four months, we’ve worked with no fewer than 6 senior women who were considering leaving their jobs. Let’s make no mistake, these were jobs where they were getting favourable reviews, where they were well-respected but for some reason or another, their ‘heart wasn’t in it.’ When we unpicked what was missing, there was a dismay  they had risen, but were often surrounded by people they felt routinely stole others credit or who were ‘in it just for themselves’ – particularly when it came to bonus time.  This dissatisfaction was increasingly at odds with how the women wanted to lead and work.

Perhaps not surprisingly, research shows that ‘deceitful’ organisations where this type ‘every man for himself’ behaviour is commonplace, have hugely unproductive cultures.  According to research by D. De Cremer on ‘Self-sacrificial leadership and follower self-esteem: When collective identification matters’ published in the journal of Group dynamics, Theory, Research and Practice in 2006, these organisational cultures are hotbed of problems. De Cremer found employees in deceitful organisations have much less commitment to them. They express greater dissatisfaction, less trust amongst colleagues, poorer performance, higher turnover and an unethical organisational climate.

These types of organisations are much more common in English speaking countries and less so in Northwestern European countries. While these countries have many cultural differences, one key disparity that may be related is the level of childcare provided by businesses and the government. Additionally, family leave is more likely to be shared by both parents, thereby decreasing the chances that new mothers are seen as soft targets in the distributions of bonuses.

If you are looking for a way to foster teamwork and efficiency, get rid of or at least significantly reduce your current bonus offerings. Create smaller spreads in the bonus gap between the biggest winner and the last ‘loser’. It’s vital people don’t have so much to individually gain from fighting for credit and sabotaging colleagues, and can spend time actually working. Only then will your organisation see a reduction in sabotage, politicking and maximisation of effort.

To avoid sabotage amongst colleagues, should we do away with bonuses? And if not, how do we create a smarter bonus system?

Is ‘Pay-by-Committee’ the way to reduce gender bias in bonuses?

pay rise discussionToo frequently, performance related pay packages leave women out in the cold. Due to their subjectivity decisions around ‘top performers’ can be biased. Plus because they are usually based on seniority women lose out on a greater share of the pot. However, I was delighted to see a reason for optimism when a recent study showed how senior women often fare better with performance based pay. The key? It works because pay is set by a committee and based on strict performance criteria rather than routine negotiation with one or possibly two people.

A survey by Southampton University Management School PhD researcher Peter Rejchrt on salaries of female CEOs found that women on boards of FTSE 350 firms have pay packages that are more than a third higher than those of their male equivalents. A report in The Southampton newsletter stated: “The University of Southampton survey found that female chief executives had an average pay package of £1.8m in 2012, including bonuses and pensions, compared with £1.3m for men in the same role. As executive pay is tightly linked to results in FTSE 350 companies, this suggests female bosses are being paid more for outperforming rivals.”

At Female Breadwinners, we have long been championing the cause of women in leadership. While we applaud the success of all top performing women on boards, there is still much that needs to be done at lower levels. The pay gap between genders starts almost as soon as women leave education, as their subject choices and an unconscious bias against women who do negotiate accounts for most of their lower earnings.

Peter Rejchrt, succinctly summarises the problem, “Female chief executives tend to be remunerated significantly above their male equivalents, which may reflect superior performance rather than representing a gender premium. These findings are in stark contrast to the situation in the rest of the workforce, where women typically earn about 15 per cent less than men. This could be because women in less senior jobs often have to negotiate their salaries, which women have traditionally found difficult to do.”

While I do coach my female clients to negotiate pay packages better, I believe that the onus lies on companies to judge their employees fairly. Performance related pay not only motivates all employees to work harder, but also seems to support career women by rewarding results rather than initial negotiation skills.

Would you support a committee determining your pay – or is there a better way?

Show Me the Money – New Equal Pay Portal

Because getting your full monetary worth is so vital for women who are the main earners we often report on equal pay at Female Breadwinners. Therefore I was intrigued hear about a new website focused on pay issue and the gender pay gap. The site was created by Sheila Wild who led on Policy at both the Equal Opportunities Commission and the Equality and Human Rights Commission.

Equal Pay Portal is for anyone who has anything to do with equal pay, and its aim is to provide easy access to the wide range of material that is available, but can be hard to find – statistics, statutory instruments, codes of practice, good practice guides and advice for workers.

EqualPayPortal aims to:

  • Help people understand what the gender pay gap is and why it is a problem that needs to be addressed
  • Provide a single source of current and recent information on the gender pay gap
  • Equip individuals and organisations to deal with equal pay issues
  • Promote good equal pay practice
  • Signpost sources of expertise, including conferences and seminars

Sheila Wild says:

“There is a huge amount of information out there on equal pay, but it has too many owners, and can be difficult to find, even when you know what you are looking for. I wanted to create a portal which allows users to get up to date information quickly and easily.”

The site is jam packed with useful information so if you need any research material on equal pay this should be your first point of call. Read more articles on pay from Female Breadwinners and if you need tips on how to negotiate for what you are worth check out our webinar recording “Getting What You Want: Negotiating for Professional Women to Ask and Get More than You Thought Possible”.

Equal Opportunities Commission Poster

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