In President Obama’s recent State of the Union address he highlighted the importance of correcting our country’s income inequality problem. The Twitterverse exploded with discussion about prioritizing one aspect of making our companies, families, and country more sustainable. Paying women similarly to men for equal work is not only a respectable idea from a social standpoint, but perhaps more importantly, it’s also a way to reinforce the long-term success of our nation’s economy. A strong economy fortifies America’s strength and endurance as a global leader.
Although American women have made great professional strides in the past 3 decades, women are still reported to earn just 77% of what men earn for performing similar work. Obviously there are a million reasons why women may happily accept an under-compensation arrangement and a million more reasons why under-compensation continues to be problematic. However, with the big picture in mind, the benefits of corporate transparency are measurable and specific. Income inequality doesn’t have to be a part of corporate cultures at this point. Just as with many other sustainability initiatives, the roadmap exists for those organizations that are open to embracing change. Organizations that want to improve their sustainability should consider beginning with initiatives to improve the management of their greatest assets– their employees. Employees have the potential to provide very large positive impacts on an organization’s bottom line. Employers need to better understand just how significant the impact can be.
In December, General Motors appointed their first female CEO, Mary Barra. It was an incredible accomplishment for Ms. Barra to reach the top position in her company and the global auto industry after loyally working her way up GM’s corporate ladder over her 33 year career. The disappointing news cycle that followed showcased the income inequality problem in spades. At first glance, we all learned what GM’s board thought about her executive value as compared to their prior CEO. Is her compensation representative of the shift that had to happen for a company rising from the ashes as they repositioned themselves for a brighter financial future? It will be interesting to learn more details in the coming months about additional specifics on her long term compensation package, and the question remains, if top executive women face this big of an income gap in their organizations, what does that say about the pay for women who perform well below the executive level? Did GM’s board completely overlooked the idea that their female customers might not interpret this news with appreciation for the way they are managing their business? For a company that is making tremendous efforts to manage their turn around well, and with a marketing strategy targeting more technology savvy car buyers with children that actually enjoy operating these gadgets, their biggest constituents to win over are busy moms and business women that want their children to be safe and happy while riding in their cars. These are the same women who hold the purse strings for their family’s discretionary spending budgets and who will drive the buying decisions for new car purchases. Time will tell if the impact to their brand will be more significant than they imagine right now. The whole point of corporate sustainability strategy is to proactively take steps that advance the organization’s objectives to responsibly win the endurance race among competitors. Hopefully Mary Barra and GM’s board are able to navigate the marathon with the finish line in sight.
Strategies to improve corporate sustainability should include prioritizing the role and appreciation of women stakeholders, including their employees and customers. Organizations need to be aware of the benefits of employee engagement. The positive impact to corporations of keeping their employees happy may seem indirect, but the improved retention, customer loyalty, productivity and safety benefits all contribute substantially to their bottom line. According to a study by Taleo Research in 2009, organizations where their employees are highly engaged enjoy 26% higher revenue per employee over those that miss out on effectively managing their human capital. The higher revenue per employee translated to a 13% greater total return to shareholders of these companies.
There’s no question that hours worked, occupational choices, and industry differences can account for much of the wage gap between women and men. Perhaps it’s unfair to portray the 77% wage gap stat as encompassing the entire picture since there are many variables and it’s such a complicated situation to assess. However, many corporations need to be more sensitive to the sustainability issues surrounding their brands over the long term and a big part of that is having a strategy that treats their employees with fairness to keep them healthy, happy, and thriving in their roles as each corporation’s greatest assets driving profitability over the long term. For organizations of the future to be sustainable, they must be ethical and most definitely be trustworthy. When women succeed, America succeeds, and global corporations can succeed, too.