During the COVID-19 pandemic, people spent a lot of time isolated and indoors, which helped foster an environment where some people now feel lonelier than ever. The result is a loss of social connectedness—the degree to which people feel the social connections and relationships in their lives to satisfy their wants and needs. When social…
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Pay Gaps Are Hazardous to Your Organization’s Health
BY: Shell Bobev // Founder • Disrupt the Gap
“Equal pay for equal work.” The pursuit of such has likely been ongoing since the dawn of employment, and has never been a more amplified conversation than at present (shout out to the U.S. Women’s Soccer team). Most of the popular pay gap statistics focus on comparing the total annual income of men and women, which necessitates a more nuanced conversation. As the founder of the wage equality platform Disrupt The Gap, I’m more focused on equality for peers doing the same job, inclusive of all demographics.
So, how does one bring innovation to solving the age-old problem of pay disparities? One of Disrupt The Gap’s core principles is serving a range of stakeholders not typically engaged by a single platform, such as employers, job seekers, community groups, and more. For the audience reading this article, let’s dive into the vital perspective employers should keep at the forefront.
The Business Case for Equal Pay
First and foremost, if equality is not objectively compelling enough, one should know that a profound “business case” for equal pay exists. For example, each incremental 7% increase in gender pay parity is correlated with a 3% rise in revenue.[i] On the flip side, organizations whose practices lead to an employee’s civil claim may outlay six figures in legal representation costs alone, amid various other consequences. Additionally, turnover costs from employees discovering pay gaps are also quite notable, as addressed hereafter. In implementing transparent and equitable compensation practices, organizations have a huge opportunity to become an “employer of choice” in competitive labor markets.Pay Equality & Psychological Safety
One of the “how” mechanisms fueling the business case is the concept of psychological safety at work. Safety is a basic human need, and as Maslow’s Hierarchy of Needs points out, a foundational pre-cursor to our ability to actualize our full potential in life.[ii] Psychological safety abounds in environments where leaders are transparent, and people feel respected and supported, able to voice their opinions and concerns, take risks, etc. The benefits of a well-treated workforce are vast and varied, including positive correlations with sales, attendance, retention, physical health, candidness, and more.[iii]Psychological safety at work is now recognized to be so vital that it is among the current priorities of the U.S. Surgeon General, who states, “Organizations must ensure that all workers are paid an equitable, stable, and predictable living wage…”. Within the lens of psychological safety, let’s take a moment to explore the consequences of pay disparities at the individual, team, and organizational levels.
Individual & Organizational Impacts of Gaps
When an individual is aware of or suspects a pay gap between themself and a peer(s), they are thrust into a stressful, disturbing state. My road to founding Disrupt The Gap involved a years-long journey to advocate for myself amid a pay gap. I’ll never forget what it felt like going into the proverbial lion’s den over and over again, approaching people who were in positions of power to make things right, never to any avail. That impact stayed with me years later when I realized I needed to heal the erosion those experiences had done to my sense of worth. A recent study found that 84% of people experience at least one workplace factor that impacts their mental health.[iv] When it comes to salary negotiation, 72% of women consider it to be “highly stressful”, and more stressful than getting a root canal, planning a wedding, or speaking in public.[v]When employees feel exploited or demoralized by a pay gap, they may no longer contribute in the way they naturally would when psychologically safe, which has implications for productivity, innovation, and so much more. As we extend the focus to team dynamics, pay gaps create an environment of competition and mistrust, consuming valuable bandwidth needed for collaboration.
Dysfunction amplified at the enterprise level impacts all conceivable metrics of organizational health. Just one metric of interest is turnover, which is vastly consequential, well beyond monetarily. Studies have revealed that, on average, replacing a salaried employee costs 6 to 9 months’ worth of their compensation, in recruiting and training expenses.[vi] So, for an employee earning $70,000, that would translate to $35,000 to $53,000. Yet deeper impacts ripple further throughout the organization via the diminishment of institutional knowledge, performance efficiency, team morale, and more. When it comes to turnover as a direct result of a pay gap, employers should know that upon learning about a gap, employees are more likely to start looking for another job than they are to take any other potential action (or inaction).[vii] And that speaks volumes to this author about women’s perceptions of the likelihood of getting a gap corrected internally.
If the danger of pay gaps have not yet been abundantly obvious, let’s all heed the U.S. Surgeon General’s warning – pay gaps are simply hazardous to your organization’s health!
The great news is that there are proven pathways to protect your organization and enable employees to do their best work.
To get even more guidance on this exact topic, tune into my upcoming conversation with WELCOA, “Your Essential Workplace Safety Protocol: Equal Pay!”, where we’ll discuss how pay equality intersects with psychological safety, the compliance landscape, and real solutions for organizations seeking to be employers of choice.
To get started on designing a workplace that puts employee well-being, psychological safety, and pay equity at the forefront, become a WELCOA Subscriber today.
[i] Equity For All. Pipeline. 2018. https://www.cwba.org/resources/Documents/Public%20Policy/Equal%20Pay/Pipeline-2018-Equity-For-All-Report.pdf
[ii] Maslow’s Hierarchy of Needs: Applying It in the Workplace. Indeed. 2019. https://www.indeed.com/career-advice/career-development/maslows-hierarchy-of-needs
[iii] 12 Reasons Why Happy Employees are the Most Productive. Future of Working. https://futureofworking.com/12-reasons-why-happy-employees-are-the-most-productive
[iv] 2021 Mental Health At Work Report. Mind Share Partners. https://www.mindsharepartners.org/mentalhealthatworkreport-2021
[v] State of Wage Inequality In The Workplace. Hired. 2020. https://hired.com/wage-inequality-report/2020/#stress-negotiation
[vi] Cost Of Employee Turnover. USI. Reported via https://www.peoplekeep.com/blog/Employee-Retention-The-Real-Cost-of-Losing-an-Employee
[vii] State of Wage Inequality In The Workplace. Hired. 2021. https://hired.com/wage-inequality-report/2021
ABOUT THE CONTRIBUTOR
Shell Bobev // Founder • Disrupt the Gap
Shell Bobev is the founder of Disrupt The Gap, a platform to empower women’s lifelong financial independence through a multi-front disruption of the gender pay gap. After more than a dozen years of corporate experience, she recognized a calling to address this pervasive issue in inclusive and innovative ways. Among other degrees, Shell holds a Masters of Adult & Continuing Education from Rutgers, a Certification in Human Resources Development from Rutgers, and a Certification in DEI from CADIA. As an educator, she has developed thousands of people across corporate, university, and community settings.Related Posts
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I’d like to think I’m working toward breaking down the stigma of mental health. I have family members, friends and colleagues who struggle with various challenges, and I have had bouts of anxiety and depression throughout my life. Yet, when someone is right in front of me, clearly struggling, I still find myself paralyzed by what to say or do.
