Achieving equal pay may be on the agenda for shareholders of major global corporations in 2020. It certainly is part of the agenda for Arjuna Capital, an impact investment firm that champions the business case for equity and diversity. During a media call, the firm announced its plans to propose 19 shareholder resolutions with 17 major corporations in 2020. Most of these proposals involve putting pressure on corporations to publish more transparent pay data on gender and racial pay equity. This includes a one-to-one comparison by role as well as median pay data by gender and race. Median pay data is an important metric to examine when evaluating true pay equity because it reflects disparity that may happen when women or people of color don’t advance into more senior roles. Arjuna Capital is also submitting additional proxy measures that include climate risk resolutions, the need for human and civil rights board experts and measures to combat workplace sexual harassment.
Arjuna’s call follows an announcement by Mastercard on Monday, March 2, where global pay equity data was published for the first time. Mastercard revealed that their female and male employees have achieved parity on a role-to-role basis, according to internal pay analysis done in 2019. The multinational financial services corporation also announced that they intend to close the global 7.8% pay gap that women employees face. “It’s time to design a better world for women, a world where women have every opportunity to succeed and to be compensated fairly for their success,” said Ann Cairns, executive vice chairman of Mastercard. “I was trained as a mathematician, so numbers matter to me,” she added. Currently, the median pay for women across the organization is 92.2 percent of the median pay for men, and the corporation expressed commitment to continuing the work of leveling salaries to full parity.
Mastercard joins Citigroup, Wells Fargo, Bank of New York Mellon and Bank of America in working to change an industry where women have been historically underrepresented at higher ranks and often faced an average pay gap of at least 20%. Experts know that solutions won’t happen overnight. As previously reported, Starbucks took a decade of steady work to build and implement full pay transparency and equal pay policies. Salesforce is also often cited as one of the first high profile corporations to level salary. While they have invested $10.3 million in making adjustments, the process has taken years as well. “That’s the progress we want to see, and it’s not going to be solved in a pay period,” said Natasha Lamb, managing partner at Arjuna Capital. “We are pleased to see another victory in what has been a very successful shareholder advocacy effort unfolding over the last five years,” she said. Lamb also mentioned that this is the third year Arjuna Capital has filed a shareholder proposal with Mastercard.
Yet even as a clear business case grows for pay transparency as a form of best practice, there is still concern from some companies about publishing data and risking exposure. “This is about having an honest and transparent accounting,” Lamb went on to say, during the call. “Nobody is perfect, and numbers can be unflattering. But that’s not reason to keep them private,” she said. “Most employers want to do the right thing,” said David Cohen, founder of The Institute for Workplace Equality, who was also on the call. The institute is a nonprofit employer association that primarily helps federal contractors. “The problem has been that companies often suffer from analysis paralysis when doing pay studies,” Cohen said. But even with the potential burden of figuring out which numbers to look at and how to look at them, Lamb noted that increased pay transparency supports organizational diversity and radical innovation. Diversity and innovation have been shown to translate into profit or stock performance, according to research presented by the Harvard Business Review.
And it’s not all bad news. Sometimes the process of working internally towards pay transparency can create positive unintended outcomes. Cairns mentioned that one surprising discovery from working on pay equity was that senior leadership learned about amazing things happening across the company. Previously, these internal innovations were unknown because they were happening in silos. Breaking down those silos created enormous benefit for everyone. “This constant and cross-functional focus has helped drive new mentorship programs, the evolution of our parental leave, our Return to Work program, close partnership with organizations like the Financial Alliance for Women and more,” Cairn said. Those discoveries may not have happened on the timeline that they did without the commitment to doing an internal review.
When asked what advice Cairns might have for other executives who are looking to drive change, Cairns mentioned that the process requires a long term commitment to the process. “The decision to release our pay equity figures has been an ongoing, years-long decision. It wasn’t something that happened overnight,” she said. Cairns also mentioned that there needs to be steady investment from senior leaders across an organization at every step of the process. “A true cross-company strategy requires cross-company partnership,” she said. For Cairns and Mastercard, committing to gender balance is perceived as not only the right thing to do, but a business imperative. “By bringing diverse perspectives to the table, we can unlock powerful ideas that open up our industry and the world’s possibilities to women,” Cairns noted. That steady work of creating equal pay will help chip away at a problem that might cost the global economy trillions of dollars.