How this company reduced its gender pay gap in one year
It’s no secret that the gender pay gap has persisted in the U.S., with women still earning 83 cents for every man’s dollar. And in lieu of a national policy, it may be up to employers to change this narrative.
According to the National Women’s Law Center, women lose $417,000 worth of wages over a 40-year-long career. This disparity only widens for women of color, with Black women losing nearly $1 million in the same period. However, alongside in-depth compensation data and company-wide self-reflection, employers have the power to eliminate these gaps for their workers, says Sara Axelbaum, global head of inclusion and diversity at marketing intelligence company MiQ.
“In just one single year, we were able to eliminate the discrepancy in our salary bands,” says Axelbaum. “It came down to a philosophical realignment for a lot of our leadership to say that it was important to them to be transparent and accountable with our people.”
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MiQ’s first Inclusion, Diversity and Equity Accountability Report was published for the public in 2021 and exposed how women were more likely to be paid at the bottom half of the company’s pay ranges. For example, women were 11% more likely to be paid in the low-medium quartile, while they were 15% less likely to be paid in the high-medium quartile. In MiQ’s 2022 report, these numbers stand at 5% and 0% respectively.
“Our first report was really an opportunity just to look at where we are right now, so we could chart progress in the future,” says Axelbaum. “Employees shouldn’t feel like they were getting taken advantage of or as if they did something wrong, versus the company being the one to make the adjustment.”
After using the data to pinpoint the disparities in their workforce, Axelbaum pushed the company to examine what people should be paid based on market research, setting up salary bands, or pay ranges, for each job level within MiQ. If an employee’s pay fell below their band, MiQ adjusted it, explains Axelbaum. The next step was to closely examine why employees are making a certain amount within their bands.
“Were these decisions made based on equity, or was it based on the philosophy of getting people as cheaply as possible?” says Axelbaum. “Because that philosophy is what got us into this hole in the first place.”
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While MiQ made substantial progress, Axelbaum admits that the company is still working to eliminate the gender pay gap at the highest pay quartile. In both the 2021 and 2022 reports, women are 6% less likely to be paid in the high quartile than men.
“What that says is we have a small group of very well-paid men and no women at that same level,” says Axelbaum. “Therefore it wasn’t that we weren’t paying women fairly, but that we need to hire more women in those senior-level positions to balance that out.”
Axelbaum notes that she plans to continue fine-tuning the rest of the pay quartiles as well and ideally wants a 0% likelihood for women and men to be in a certain quartile. MiQ does pay raises twice a year, which Axelbaum says gives ample opportunity for further adjustments.
This progress cannot end at gender either — Axelbaum highlighted that while women were more likely to get spot bonuses than men, white people were more likely to get a bonus than BIPOC employees. This is another disparity Axelbaum is working to eliminate for their 2023 report.
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“Pay gaps happen because no one turned to the mirror and asked, ‘What are we doing?'” says Axelbaum. “People made very subjective decisions, and we hadn’t created a system where we could hold ourselves accountable.”
Without accountability, Axelbaum underlines how easy it is to let the vicious cycle of pay disparity continue.
“Women and BIPOC come from historically marginalized backgrounds and are socialized to be thankful for everything — and businesses have taken advantage of that for a long time,” she says. “This has led to a constant domino effect, where people keep getting paid poorly because at each subsequent job, hiring managers know they can get them for a steal.”
But Axelbaum underlines that accountability has to be encouraged from the top down. Within the first week of being hired in 2020, Axelbaum recalls telling the founders of MiQ that she wanted to publish their DEI data within three years and expose where the company stood — something she was unable to ask of her previous employer. Fortunately, MiQ’s co-founders didn’t want to wait three years.
“If employers don’t break that cycle, then it’s not going to change,” says Axelbaum. “Pay people what they’re worth, not as cheaply as you can.”
