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?

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