Closing the gender pay gap

I’m passionate about pay equity. I think this started with me being a fan of underdogs. Somehow I relate to them on a personal level or their stories are really touching my heart. When it comes to pay; equity is critical.

Relating that instinct to my profession, there comes the pay equity. In a more specific way; gender pay. I don’t think the value of effort, time and experience should be limited by a physical, mental or social categorization. Gender being a major one and unfortunately it’s been used for segregating the workforce for decades (or even centuries!)

How can we close it?

Here are my thoughts after working on a lot of those projects. I tried to list them down and also give some sort of explanation for each.

1. Everything starts at hiring

I studied engineering and worked specifically a lot in the field of process management. While building processes, there’s a key element and it’s the most obvious one: input (or prerequisites) – If you think an employee’s life cycle in an organization as a process, their hiring is the input. Now, also remember that famous quote: “garbage in, garbage out”

That exactly applies to gender pay gap. We should clear the hiring decisions and eventually compensation packages free from a potential bias around gender. Scientifically proven, female candidates provide a lesser amount of current compensation data and have less tendency to negotiate for higher compensation.

Companies should avoid lowballing offers and take the advantage of (lack of) these actions.

If you pay a certain amount for a job, it shouldn’t be influenced by the current status of the candidate.

2. Workforce distribution matters

Well, the chances you dominate the statistical outputs as a minority is pretty low. If you even do, then you are the one who’s skewing the data anyway.

In that case, having an as equal as possible headcount distribution by gender is important. This would ensure that median pay is more standardized and impact the overall rates in an equal importance (or weighting).

3. High paid jobs shouldn’t be dominated by one gender

This is unfortunately the truth in our current society. At least speaking for the last 3 or 4 decades, most of the highly paid jobs, e.g. Engineering, are dominated by male workforce. This is also closely related to the point 1 above. STEM education is more favored by male students and we see almost a handful of women studying engineering in each class year compared to tens or maybe hundreds.

I can clearly remember that my class year in my university had only 4 women vs. 200+ men. We simply cannot talk about equity where the stakes are not equal at all.

4. Your boardroom should be the example

This is also a little bit related to the above. In the basic organizational design, the compensation will be directly correlated with the hierarchy – which makes sense; no questions on that.

The issue is though who is taking those seats up at the top? If your C-level is male dominant technically speaking there’s almost no way that you can talk about pay equity. Think about the Pareto Rule: 20% of the highest paid people will skew the data with 80% dominance. If your highest paid employees, aka your C- and executive level is male, then there’s already a pay gap created among both gender. The only way to overcome that is you have a diverse boardroom.

I think these four major factors are quite important in influencing the gender pay in our organizations and also in our society.

Promoting STEM education for the female students, giving them more opportunities in the workforce, treating them in a bias-free way during key touchpoints (hiring, promotions, transfers etc.) in their employee lifecycle will definitely helps us close this pay gap. It’s not easy, not something we can solve overnight but with a proper planning and strategy, it’s possible – and when that happens we will then talk about a developed society.

D&I in Rewards

Nowadays, HR world’s priorities are filled with Diversity and Inclusion initiatives and priorities.

I’m not surprised by this as we have seen how the world is shaken recently on this matter. My aim in this post is to share my thoughts about D&I initiative and how they can be linked to Rewards practices.

What’s D&I anyways?

Global Diversity Practice, a global consultancy firm specializing on such practices, defines it as follows:

Diversity is any dimension that can be used to differentiate groups and people from one another. In a nutshell, it’s about empowering people by respecting and appreciating what makes them different, in terms of age, gender, ethnicity, religion, disability, sexual orientation, education, and national origin.

Inclusion is an organizational effort and practices in which different groups or individuals having different backgrounds are culturally and socially accepted and welcomed, and equally treated. These differences could be self-evident, such as national origin, age, race and ethnicity, religion/belief, gender, marital status and socioeconomic status or they could be more inherent, such as educational background, training, sector experience, organizational tenure, even personality, such as introverts and extroverts.

Simply put, it’s a dimension which can explain the differences of your workforce by several groupings and respecting those differences.

How does it relate to Rewards?

In the recent years, we started seeing an accelerated effort from a lot of states to point these and how they relate to the social welfare of their population. Obviously, it’s directly correlated to the workforce and the workforce’s living.

For any member of the society, who is also a part of an organization and earns a certain level of compensation and is entitled to some benefits, it automatically impacts their involvement in the broader society.

A perfect example for such exercise is gender pay gap.

A lot of countries are concentrating on passing legislation that checks the pay equity between gender, ethnic group or race. It’s generally a reflection of the social issues that the respective country faces and tries to either increase awareness or even penalize based on the results.

Past reflections

I wrote about different pay scales for different nationalities and how this practice was interestingly common in the Middle East long time ago.

I believe this is diminished significantly over the years but it was a great example how far we came along and how much further we need to go.

You can even see the French legislation and see that one of the major indications is about getting a salary increase after returning from maternity leave. This is deliberately added to the legislation as the pay discrimination against French working moms is systemically common and creates a pay gap that is becoming harder to close as year passes by.

What can we do?

These were few examples in our field that shows how pay equity is created, and unfortunately, pretty easily.

My quick step-by-step recommendation on effective pay equity and fairness work are as follows:

1. Conduct regular checks

Obviously, everything starts by analyzing and identifying the gaps. If you don’t ask question, you will never get an answer. Therefore, asking the right questions, looking at all the different data cuts is vital.

2. Find the root cause

Once you identified the gaps, dig deep and understand the root cause. Sometimes, it’s pretty easy to tell that a pay gap is because of a wrong offer that’s extended or it’s just an outlier. Bear in mind that a compensation "life cycle" is technically a timeline and the reason could lie at any point of that timeline. Reflecting back is pretty helpful in this case.

3. Train your workforce / Create awareness

Create awareness and educate your workforce on importance of pay parity and fairness. Start from the population that has a decision-making authority in Rewards processes, but scale it to the whole workforce. Cascading this responsibility with creating awareness will help you down the line.

4. Keep the consistency on practices

Be consistent. I think this is already a crucial aspect of being a Rewards person but exceptions create outliers; outliers create inequity.

Please let me know if you’d like to see more hands-on examples on how to look into these processes or if you are looking for more details on these aspects.

Most powerful yet unsung Excel functions for Compensation professionals

I thought about writing a more technical post but didn’t know where to start from.
It could be a nice series of post starting from scratch, however after some googling, I thought it might be more beneficial to write about the unknown and/or unrecognized magic words that saves your time in front of the screen covered with cells.

As I advance in my career in Rewards area, I started to use macros more and more. This could be a good subject for another post but there are some formulas or that saved my life.

I will list some of these Excel functions and give you examples how and when to use it. You will not find the generic VLOOKUP() and similar essential formulas in the following list. Here we go:

INDEX() and MATCH() combination

Slowly leave your VLOOKUP() down and kick it to me. Nobody needs to get hurt!

Yes, this is it. The combination of INDEX and MATCH is one of the most powerful formula combination to save your life while trying to extract data from a data table with multiple input variables.

Let’s say we have a table like the one below and we would like to get the “Benefit” amount of the employee with the ID of “EMP3”:

MS Excel INDEX/MATCH combination

The formula would look like this:

=INDEX(C4:E13,MATCH(“EMP3”,B4:B13,0),MATCH(“Benefit”,C3:E3,0))

As you can see, the index formula is the main formula where you need to identify as a first variable the area where the values are stored. You should not choose the left and top column in this area hence they are identifier row and column which will help us in the second and third variable.

INDEX() function works this way: I will give you the row number and column number and the cell at the intersection of those is the value I want.

MATCH() function a little bit different: Give me the exact place of this value in a range/series.

So with the MATCH() functions we identify the row and column numbers that INDEX() want. We want the row number of EMP3 in unique ID’s and the type of the pay “Benefit”.

IFERROR()

Life cannot be without errors. More important thing is how you handle the errors. This formula can give you a better control in your data management if used properly.

Let’s say, you want to pay 5,000 USD even there’s an error in the calculation (in this example addition of three cells) of a cell.  Normally, the formula would look like this:

=A1+F45+K7

What if K7’s value is not a number? The Excel would give you an error for sure. To avoid seeing “#….!”, you can use IFERROR() and tell that even if there’s an error my sum would be 5,000:

=IFERROR(A1+F45+K7,5000)

Pretty simple, huh?

AND() and OR()

The basic logical operators are here. If you want to check two conditions that they are TRUE at the same time (AND) or at least one of them (OR) you can use these:

=AND(“Arif” = “Arif”, “Excel” = “Excel”)

will always give you a boolean result of TRUE like

=OR(“Cat” = “Dog”, (3-2) = 1)

does.

Now, before going forward I would like to warn you about the following two functions. Although they are saving lives in some instances, they are called as “volatile functions”.
A Volatile Function is one that causes recalculation of the formula in the cell where it resides every time Excel recalculates. This occurs regardless of whether the precedent data and formulas on which the formula depends have changed, or whether the formula also contains non-volatile functions. That’s why you have to be really careful and mostly avoid using this.

OFFSET()

We will use the same table above. As per that data table, we will analyze the below formula and see how OFFSET() function works:

=SUM(OFFSET(C4,4,1,3,2))

Translation is: We will start from C4, go 4 cells down, then 1 cell right and starting from that cell we take all 6 values in a 3×2 table and add them all… Makes sense, right?

The table is this part:

3x2table

So, the result would be in this case 37,594 in case you want to try.

INDIRECT()

I use this mostly in consolidation of various files with pre-set names that can be linked to an identified variable.
For example, you have one template for each country in your region and you want to get a value from its first sheet, cell A1:

indirect

It might be confusing, but the above figure is pretty self-explanatory. Please note that, you will see a #REF! error, if the target Excel file is not open.

I will continue to explain other functions in the Part II of this post and hope that this will help you come up with a better Compensation analyses!

People Analytics and Human Resources

Nowadays, the fanciest topic in Human Resources field is People Analytics. The word “People” comes from the area of Human Resources and the word “Analytics” from Statistics, specifically Predictive Analysis.

The evolution of decision-making in HR is now on the verge of shifting from reactive to a proactive position. The main reason behind it would be the changing dynamics in the working environment and the good, old “talent war”. The traditional HR decision-making process excluded the data analysis until the last decade. It was fascinating; Human Resources was also becoming a true co-pilot where the decisions were backed with fancy graphs and some numbers. But what was the source of data? Past.

We are now in an era where we start trying to become well-recognized fortunetellers. The success lies within the capability of reading the future based on historical and current events while assessing and implementing current factors that could affect the situation.

So, the summer days of “Analytical HR” is over. It’s becoming obsolete. HR needs to be geekier, more technology-driven, more complex than ever.

We need more “people engineers”, statistician or mathematicians in HR department rather than some social guys/ladies that are competent in arranging events or shoot out some fancy corporate announcements  to become more successful. No puns intended!

I just wanted to remind you that the world’s changing.
So should the beloved department of Human Resources.

P.S.: I will go into detail in another post what would it mean especially in our area, Total Rewards.

Working under Stress?

It’s been so long since the latest blog post but I’m sure you can excuse me if you ever have an idea of the “Rewards peak season”. It’s going off, so expect more activity here!

Back to what title says – if you think you’re under pressure at work, please think again after watching the video below. Just saying…