Amid pressure from shareholders and attention from the public, companies, from Google to Cisco to Salesforce, are increasingly attempting to address compensation gaps — particularly those between men and women.
This week, Nike — which earlier this year received complaints by women at the company about inappropriate workplace behavior and a toxic boys’ club culture — became the latest to do so. In a memo to employees, the company said it would adjust the pay of about 10 percent of its 74,000 workers and revamp its bonus system, noting its compensation program is designed to “support a culture in which employees feel included and empowered.” The new bonus system, while still taking into account the performance of individuals, will be based on company performance and targets and reward people more consistently across different geographies or corporate roles — which could have the effect of reducing disparities or potential bias. The move followed a “deeper analysis” of its pay system.
Nike spokesman Greg Rossiter told The Washington Post that the pay adjustments were about “ensuring Nike is competitive across all levels, geographies, functions and brands,” addressing external competitive realities. He cited Nike data that show there is virtually no gap between men’s and women’s pay and said “we continue to monitor the data and adjust where appropriate, with 1:1 as our goal.”
Pay consultants and lawyers say more and more companies are doing pay audits after pressure from activist shareholders, changes to state laws and a growing focus on the issue by the public. Some also simply want to even out compensation gaps.
“A lot of what’s driving it is social consciousness, and the media attention that’s on this topic,” said Cheryl Pinarchick, a partner at the law firm Fisher Philips in Boston who has seen a big uptick of pay audits and adjustments in the past two years.
State laws, too, have made an impact. A number of states have updated or passed new pay equity laws — including banning employers from asking about salary history, ensuring workers can ask one another about pay or broadening how companies should think about the issue. State laws are “a fairly major change,” said Gail Greenfield, a principal at the human resources consulting firm Mercer.
But for many companies, there are growing pains. Some may not be sure they have the budget to close any gaps that are found. Others may be hesitant to do the analyses because discovering — and then acknowledging — unfair pay in the past could present legal risks. A couple of states, Massachusetts and Oregon, have even put in place protections for employers who evaluate their pay and can show they’re working to correct any problems, Pinarchick said.
This is partly why some companies stay mum about the issue, even if they decide to do audits.
“You’re not hearing from too many companies publicly talking about pay equity,” Greenfield said. While some have acknowledged disparities, what many do is roll the adjustments into a merit pay raise, she said. “If someone usually would have gotten a 3 percent raise, maybe this year it’s 6 percent.”
Pinarchick agreed, saying others use phrases such as “internal benchmarking or external benchmarking. They’re talking about fairness, they’re talking about ‘updating compensation policies.’ They’re not coming out and saying ‘we found a problem and we’re fixing it.’ ”
Corning senior vice president of human resources Christine Pambianchi said she did not worry about those risks when the company embarked on its effort to close its small gender pay gap because they routinely analyze pay and were transparent about human resources practices with employees. After finding in 2013 that women made 99.2 percent of what male employees earned — the company now reports zero pay gap — Corning began working with Mercer and not only made salary adjustments but went hunting for what might explain the small gap.
They found two likely reasons. One was asking about salary history on job applications, a practice it has since ended. Another was to rethink how Corning considers the promotion of administrative and technical workers, which are predominantly women at Corning, into professional-level jobs. Rather than treating them as a regular internal promotion with an average bump in pay, they began treating them as an outside hire, offering much larger corresponding raises when employees made that professional leap.
Natasha Lamb, a managing partner with Arjuna Capital, says such efforts to unearth root causes, or broader changes to compensation structures, could help companies go beyond just putting a Band-aid on the problem.
Employers, she said, need to go “back to fundamentals so every year we don’t need to make up these gaps.”
Here are some of the other companies that have recently announced changes:
• Cisco: A Cisco Systems human resources executive said in 2017 that it had adjusted pay for 2 percent of its employees after an audit.
• Google: The company said in March that it increased compensation for 228 “Googlers” that worked in job groups where it found “statistically significant pay differences.”