Of all the types of jobs in a typical company, none are as metrics-driven as sales. Most salespeople work for some combination of salary and commission: The more they sell, the more they earn. If they meet their quotas, they are rewarded. If they don't, not so much.
You would think paying people by performance data alone would erase all danger of gender discrimination. Unfortunately, it doesn't. Data analysis shows that even when salespeople are compensated by performance, bias leads to women earning less than men.
Xactly, a cloud-based platform used to compensate salespeople and other functions made this discovery recently as part of its ongoing data analysis. Because the company calculates compensation for more than 200,000 individuals at 700 different employers, the company often mines this data to uncover trends. "We have data scientists and all they do is look for interesting insights and information," says Xactly CEO Chris Cabrera. "Gender bias is in the news a lot, so that's why we started to look for it."
What they found was surprising, and not in a good way. "Not only were women being paid less in terms of their base salaries and rates against commissions, but they were performing at a higher level than men, by 3 to 4 percentage points overall." Not only that, Cabrera reports, but women leaders tended to hire more balanced teams. "Male-led teams were three-quarters men, on average, whereas it's half and half for women-led teams," he says. "So part of the message is, why is that? Why are you hiring three-quarters men when the data shows that women are performing higher?"
Here are a few more questions: Why are women being compensated less well than men in a system designed to be a pure meritocracy? Why are women performing better than men? How did all this happen?
Though Cabrera doesn't agree, I suspect part of the problem is "sticky floor syndrome." Whether by temperament, societal pressure, or because we're raised differently, women can be slower than men to put ourselves forward for opportunities or make certain that we get credit for all our work. Sticky floor syndrome means that women are less aggressive when negotiating base salary and/or commissions with our employers. It also makes women slower than men to consider ourselves well qualified for promotions or other opportunities. That may explain why women are performing slightly better--we really do feel that we have to work harder. (Here's a closer look at sticky floor syndrome--and what we can do to fight it.)
Whatever the explanation, it isn't deliberate unfairness. Cabrera is quite certain of this--because after he learned about these findings, he used Xactly Insights to review compensation at the company itself. He found that even at Xactly, compensation seemed to reflect some gender bias. Out of the company's 350 total employees, three were being paid out of line with their positions and their peers.
"We we went about fixing those," Cabrera says. "And then (without naming individuals) we talked about it with the rest of the company. We wanted to show we were being transparent and eating our own dog food."
What should other small companies do to avoid unfair compensation practices?
1. Examine the data.
Whether you use software tool or simply have a thorough review by whoever's best at crunching numbers in your company, it's worth taking the time to carefully check your internal compensation data and make sure doesn't reflect bias based on gender, race, or anything other than work performance and experience.
2. Make fixes if needed.
If you do find discrepancies, bring your compensation in line. If you can spot unfairness in your compensation your employees can too. So could their attorneys, in a worst-case scenario.
That doesn't mean you have to change everyone's pay tomorrow, though. You can make slow adjustments, for instance by giving some employees a slightly smaller or slightly larger salary adjustment at review time, and gradually bring things into balance.
3. Support education efforts to fight bias.
That's what Cabrera most believes needs to be done. "It's a complex issue," he says. "Data shows that, right out of college, the pay gap begins." To him, this indicates systemic bias.
And, he says, once that early gap exists, the damage is done. "It becomes almost a self-fulfilling prophecy where women get less access to better jobs, and 20 years into a career, they can be paid less than men with the defense that, 'Hey, their experience is less,'" he says. "We have to solve the problem right at the root, and that's an education process."
4. Talk about it.
Because the bias is unintentional, Cabrera believes bringing it into the daylight may go a long way toward addressing the problem. He recalls how, early in his career, he was tasked with hiring eight people. After the first four, his manager, who was African-American, pulled him aside and asked, "Have you noticed that they all look and sound exactly like you?"
From that day on, he's been committed to diversity, he says. "If you make hiring managers aware of bias, they are likely to do the right thing."