How incentive pay penalises women | Women's Agenda

How incentive pay penalises women

When discussing gender equality in the workplace, we have to discuss merit. Proving merit is one of the most ambiguous tasks: there is no single fail-safe scientific definition.

One of the ways which merit is pursued or awarded is performance-based pay. Men and women who attain or exceed targets ought to be rewarded commensurably. That hardly seems a controversial assertion does it?

New research from the New York Federal Reserve has found that there may be a question-mark over this. They analysed the pay of 40,000 executives of listed companies between 1992 and 2005.

They found three key points that are of concern:

  1. Accounting for 93% of the gender pay between executives, female bosses are less exposed to incentivised pay.
  2. When firm value increases men receive on average 10 times the value of incentive pay over women.
  3. Female executives are more likely to be exposed to negative organisational performance than men.

I’m calling that the triangle of doom, three sharp points that prevent women from receiving appropriate remuneration.

Earlier this year the Workplace Gender Equality Agency found that the gender pay gap is widest in management. For some industries the gap is as wide as 45%, which unfortunately dwarfs the growing gender pay gap proper at 18.6%.

Perhaps it is time for incentivised pay to be reviewed?

This data isn’t about the gaps between the roles that are considered less strategic, like HR or marketing, but about executives at large.

Women who reach roles of this calibre are those who have broken through at least some of the so-called glass ceilings. They have fought their way up the career ladder and are expecting comparable and equitable remuneration their efforts. Why aren’t they getting it?

Employing and supporting women into leadership is not one of the soft issues, it is one of the great economic opportunities which we are wasting.

Challenged by gender inequality on a number of fronts, corporate Australia has some work to do.

For organisations considering incentivised performance, managers need to consider not only where women are placed within strategic functions but the perception of performance.

The American research clearly indicates the discrepancy: women are judged more harshly than their males colleagues when it comes to pay and they are expected to perform better than men.

It goes to the heart of the value of the gender pay gap. When women lose out so significantly it’s tempting to ask why we bother?

Since 2005 corporate landscapes have changed. We are more vigilant on remuneration and unconscious bias. It takes sustained effort and interest in order to achieve the gains that are required.

Shining a fluorescent light over something we thought had been working and then realise it isn’t, helps.

Next time incentive pay is mooted as an option ask for clearer targets and more equity in the approach.

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