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Business Journal
Gender Pay Gap: Two Key Causes
Business Journal

Gender Pay Gap: Two Key Causes

by Jane Miller and Amy Adkins
Chart: data points are described in article

Story Highlights

  • Reasons for gender pay gap: hours worked and perceptions of hours worked
  • Base performance management on outcomes, not hours
  • Create a flexible work culture

This is the second article in a two-part series.

The gender pay gap is one of the most controversial topics related to women and work.

No single explanation can account for the differences in men's and women's paychecks. In Gallup's report, Women in America: Work and Life Well-Lived, we chose to focus on two underlying reasons for the gender pay gap: hours worked and perceptions of hours worked. In jobs where employees are promoted and rewarded based on the actual or seeming number of hours they clock, men have the advantage.

Two Ways to Align Pay With Outcomes

Organizations should base compensation on the reality of performance -- not the perception of performance -- to ensure that all employees have an opportunity for equitable and fair pay. Below, we outline two suggestions to help organizations better align pay with outcomes.

Base performance management on outcomes, regardless of where employees do the work or the number of hours they work. As the work environment has changed, so have definitions of "hard work." Employees and organizations might think of hard work as the energy they expend, the number of activities or projects they accomplish, or a certain number of hours they log every week or year.

Maybe hard work is spending six days a week in the office for 10 hours a day or working five days a week, eight hours a day, with the same results. Hard work can be working harder, or it can be working smarter.

Definitions of "hard work" vary from employee to employee and organization to organization, but hard work is still a factor in career success. No matter how it's defined, the point is that every company has to define -- and reflect -- hard work in its culture.

For some employees, varying definitions of "hard work" can become a barrier to pay, promotions and career opportunities when organizations only define it in terms of hours worked in the office and overlook other performance metrics that allow employees to shine with their strengths.

Hours matter, but they are not the only measure of employment value. All jobs are mission-critical, whether an employee takes incoming service requests from customers six hours a day for 50 faithful weeks a year or works 2,500 billable hours each year with clients.

For each role, managers should help employees understand what success looks like in relation to outcomes and how achieving those outcomes connects with an employee's work goals. Organizations need to think about how to compensate and reward those who work hard but who have fewer hours on their time sheet every week. They also need to consider how to motivate those employees.

Beyond hours, managers can hold performance reviews that focus on employees':

  • aspirations and career trajectory in the organization (start dates and various job roles)
  • strengths, including how they use their strengths to do what they do best every day
  • performance metrics (for example, client scores, client portfolio, production or operational volume, service scores, sales and marketing revenue, retention scores) as they pertain to the successful outcomes of their jobs
  • career goals and how they align with team, manager and organizational goals
  • well-being goals and life outside of work

Competitive scorecards that include hours and other metrics can still have a place in a company's performance review process, but managers should use them along with feedback based on each individual employee's expectations and objectives. Work cultures that emphasize the perception of hours worked without objective measures can create income inequality.

Create a flexible work culture. Underlying much of the discussion about performance management is the idea of a flexible work culture, which can help level the playing field for all employees. When employees can play a role in determining their own work time, they have a better chance of "catching up" to their peers or setting a pace that allows them to excel.

Working women seek and demand a flexible work culture. They are drawn to and stay with companies that give them greater control over their lives. Several Gallup studies highlight the importance of flexibility in attracting and retaining a female workforce. Our data show that:

  • 60% of female job seekers say greater work-life balance and personal well-being are "very important" to them when considering whether or not to take a job with a different organization
  • 53% of stay-at-home mothers say having flexibility in their hours or work schedule is a "major factor" in their ability to take a job
  • 46% of female employees say flextime is the most important benefit a company can offer its workers
  • 44% of female employees would leave their current job for one that allowed them to work off-site part time

Organizations often want to know how to ingrain flexibility in their cultures. There is a vast range of options, and it is impossible to define one policy that works for every role or industry. Nurses and flight attendants, for example, often have stringent start and finish times and long days, but they might be able to choose the days and weeks they work. Some office workers have the option to work anywhere and anytime they want, as long as they get 40 hours in every week.

We are not suggesting that organizations need to reduce the number of hours they require employees to work, but rather to adjust job roles and pay expectations and allow flexibility in as many roles as possible. Even jobs that require more than 60 hours of work per week can have a flexible component -- including a work-from-home component -- that benefits employees and their families.

Leaders Have to Model the Behavior They Tout

Managers are vital to making flexible scheduling work for employees. But managers don't shoulder full responsibility for the success of a flexible workplace policy. Leaders have a job to do as well.

A flexible work culture starts at the top. Employees have to see executives and managers living the behaviors they tout. Employees need to see managers leaving work early to attend their children's soccer games and jumping back on email at night. They need to know that their sales director works from home one day a week.

In addition, organizations have to get around the "flexibility stigma" that occurs when people are penalized for taking advantage of flexible arrangements. And to do that, leaders and managers have to set the stage. Flexible work cultures succeed only when they are based on trust, authenticity and accountability for performance.

Learn more about what it takes to attract, engage and retain a gender-diverse workforce. Download Women in America: Work and Life Well-Lived.

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