Actress Jennifer Lawrence reignited a national debate on equal pay last year when she criticized Hollywood’s gender wage gap after learning she was paid millions less than her male co-stars in the 2013 film “American Hustle”—a truth revealed in a 2015 Sony Pictures hack.
Her co-star in that movie, Bradley Cooper, said it was “embarrassing” that he earned significantly more cash than Lawrence and Amy Adams (both women won Golden Globes for their roles and Cooper did not). He announced he would include his female colleagues in future pay negotiations in an effort to further pay transparency and equality for women.
While the general pay gap has narrowed from 1960 when women earned about 60 cents for every dollar a man made, the Institute for Women’s Policy Research (IWPR) calculates that if change continues at the same pace, women will not reach pay parity until 2059. That’s a long way off. And although there are federal laws that govern pay disparity based on gender — the Lilly Ledbetter Fair Pay Act, the sex discrimination provisions of Title VII of the Civil Rights Act of 1964 and the Equal Pay Act, the last two of which have been on the books for more than 50 years — they are not enough.
Governments around the world, in efforts to boost their economies, have recently started to embrace a culture of disclosing gender pay gaps. In July 2015, the U.K. unveiled a plan requiring companies with 250 workers or more to publicly post their gap. The U.K. followed Austria, where employers must publish yearly reports detailing the average income for men and women in similar roles, and Belgium, where pay discrepancies between the sexes must nakedly appear in a business’s annual audit.
As European nations push for more transparency, the United States has nudged at least one group of employers to share more pay information. Effective January 11, 2016, Executive Order 13665 was put into place protecting employee inquiries, discussions, and disclosures of their own pay and benefits, and the pay and benefits of others for those who work for federal government contractors. The revised pay transparency rule applies to covered contracts entered into or modified on or after January 11, 2016. For more information on complying with this new mandate, organizations can access Search Willis (BLR).
For Some Companies Pay Secrecy Is Out; Pay Transparency Is In
A growing number of workplaces are making employee pay more transparent. This movement is driven by the explosion of compensation information available on the Internet, as well as the shift in the workforce: Millennials are accustomed to sharing personal information, especially via social networks.
Companies such as Buffer, a social media startup, and SumAll, a New York-based data analytics’ company, have cultures of transparency and open communications specifically related to compensation. Both companies are radically transparent, posting employee salaries as well as other pertinent pay and formulas used to determine wages (making it accessible to all within those organizations and the general public).
At Baltimore-based software startup Figure53, the staff voted on what they believed would be fair compensation. This resulted in a flat pay structure where the founder gets paid as much as the rest of the team and everyone knows it. While the pay transparency protocol and philosophy of these companies is not the norm, more are taking steps to further pay transparency and gender inequality.
In April 2015, Reddit made headlines by announcing that it would prohibit salary negotiations for both candidates and existing employees. The San Francisco-based Internet news company adopted the policy in hopes of closing the gender pay gap. Several other tech companies, including Jet.com and Magoosh, recently adopted similar policies.
Pay communication tenets within companies still run the gamut, from paranoid secrecy to complete transparency.
Pay Transparency Spectrum
Thus, in the day and age of information overload, isn’t it time for more companies to assess where they currently reside on the pay transparency spectrum in an effort to better strike an appropriate balance between pay confidentiality and pay transparency?
Letting employees in on long-held compensation “secrets” will not only go a long way toward bringing better equality of pay among men and women, but will create good will, leading to a healthier business culture, stronger commitment to the organization, enhanced trust in management—and ultimately better business outcomes.