Article: Why women get paid less than men

Compensation & Benefits

Why women get paid less than men

Gender disparity in pay packages exists and needs to be addressed urgently. Here is how

Bhavna* is a graduate engineer from BITS Pilani and aspirant MBA from ISB, Hyderabad. She is a topper in her class. As she clears her final round of interviews on Day 0 of placements, she dreams of joining this startup product technology company. This is really what she wants to do.

She waits outside for the panel’s final decision. Inside the room, the recruitment manager tells Chetan (CEO & Founder of the company) that she will join for 18 lakhs per annum. “But we are offering 20 lakh to everybody else at the same job band,” says Chetan. But she will take Rs 18 lakh, why offer 20? wonders the rest of the panel. Finally, she gets the job and Chetan insists she should get paid Rs 20 lakh, like everybody else.

This week, a survey by Monster India highlights that the median wage earned by women is 27 per cent lower than what men make. On an average, men earn Rs 259.80 per hour whereas their female colleagues earn just Rs 190.50. The survey also reveals that the gender pay gap is not uniform across sectors. In the IT sector, women earn around 34 per cent less, while the difference is only 19 per cent in the finance sector. 

This data does not surprise me — we all know women are paid less, either in their first jobs, or as they move up during their career. There is enough literature and studies on why this is still true today, its historical and social reasons. To me, the solution is actually quite simple: pay for the role, not for the person, pay for the output not for the face-time, pay for merit not for networks. It is a leadership problem that leaders, like Chetan, need to solve.

Problem: Lower salary on a job follows women to other jobs.

Solution: Stop paying less for the same job, same responsibility and same output. Equal job, equal pay. Period.

How: Assess the dimension of the problem in your company, create a feasible plan along with resources you will need to bridge it (financial and non-financial) and, finally, get your board’s commitment. Once the journey starts, it should only lead to 100 per cent equality of pay — no compromises.

Problem: Women struggle with asking for a pay rise and they don’t usually know co-workers’ salaries. These two problems are somehow two sides of the same coin.

Solution: Bring about transparency in pay.

How: Pay structures and reward rationale should be public to the extent that it does not create a competitive disadvantage for your company. Transparency brings in fairness, as it is there for all to see.

Problem: What your organization values is not necessarily what you compensate for. Really assess yourself. What are the stereotypes that stand on the way to an equitable reward structure?

Solution: Strengthen the foundation of your rewards strategy.

How: Go back to your vision, mission and values, to your business model and business strategy. Is your reward strategy aligned to that? Is your actual reward policy and budget allocation aligned to that? That should drive what you value and hence what you reward for, regardless of the person.

This is not about women or men; it is a leadership issue and a rather embarrassing one at that.

* Name changed to protect privacy

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Topics: Compensation & Benefits, #HRInsights

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