Dive Brief:
- Multinational bank Citigroup disclosed last week it found "unadjusted" pay gaps between male and female employees and between minority and non-minority employees in its global workforce of more than 200,000.
- A company blog post written by Head of HR Sara Wechter said the business analyzed its pay practices in three countries comprising 36% of its workforce and found that median pay for women at Citigroup was 71% of the median pay for men, while median pay for U.S. minorities was 93% of the median for U.S. non-minorities. Wechter said the analysis did not adjust for factors such as job function, level and geography.
- Wechter said Citigroup would work to improve representation in senior roles, including those in the range of vice president through managing director. The company has set a goal of upping the representation of women in these roles to at least 40% and the representation of U.S. black employees in those same roles to 8% by the end of 2021.
Dive Insight:
Pay equity has captured employers' attention in recent years due to a variety of factors, including investor activism, online transparency brought by tools like Glassdoor and the enactment of several state and local laws.
That increased focus hasn't quite solved the problem on a broad scale, however, and the results of recent efforts are still "mixed," Commissioner Charlotte Burrows of the U.S. Equal Employment Opportunity Commission said during an employment law conference in November. Retroactive pay increases have led to dramatic expenditures for some companies, like Salesforce (which spent $3 million on two separate occasions to raise wages), but employers are at times reluctant to take the route, recognizing potential legal liabilities.
Data on the issue varies — separate studies put the pay gap between men and women, for example, anywhere between 32% and 45%, with others calculating lower or higher values — yet most suggest the existence of a gap. An August 2018 report offered insight into the extent that pay gaps exist beyond gender alone; researchers found evidence that black women were not only paid 38% less than white men on average, but also 21% less than white women.
Citigroup's disclosure also highlights one of the issues in evaluating company transparency on the subject. In early 2018, the company announced pay rates for women and minorities were 99% of that for men and non-minorities at Citigroup. According to a report by Bloomberg, this coincided with similar announcements at the time made by three other large banks — Bank of America, Wells Fargo and Bank of New York Mellon — that employee pay rates were essentially the same with few differences. But it was unclear, according to sources cited by Bloomberg, how exactly the methodology of determining those rates was when taking other factors into consideration.
Wechter wrote that the 2018 review "adjusted pay to account for a number of factors to make the comparisons meaningful, including job function, level and geography," the factors that were apparently not accounted for in the analysis revealed last week.
Employers may need to conduct their own pay audits to answer questions from both customers and potential employees. Attorneys have laid out basic plans for doing so, and general recommendations are that employers carefully consider which positions to compare, which company data to draw from and which types of compensation to study, among other questions. Those in charge of compliance might also note passage of related laws, including those prohibiting salary history questions during the interview process, that affect organizational approaches to pay equity.
