Feature Model Practice Equal Pay for Equal Work
Principle I: Employment and Compensation
2014 Challenge Submission
For 45 years, Gap Inc. has stood for opportunity and equality for all. In 1969, cofounders Doris and Don Fisher each put in an equal amount of money to open a store in San Francisco that would sell jeans and records to young men and women, creating The Gap. They also shared an unconditional commitment to make a positive impact on people’s lives.
It seems simple now but, at the time, the idea – and the equal partnership – were revolutionary.
Gap Inc. is an inclusive workplace that is a great place for women to work. Gap Inc. offers women opportunities for growth and professional development throughout their careers and maintains policies and benefits that support real life choices and flexibility in career and personal goals.
“I am confident in what Gap Inc. stands for. To acknowledge that men and women should have equality in the workforce, and actually implement this globally speaks highly of this retail giant. I am very happy to be a part of this organization and look forward to endless career opportunities in the future.”
Assistant Store Manager, Gap Outlet
The decisions of women are critical to Gap Inc.’s business – both as employees and consumers. Worldwide, the purchasing power of women continues to grow. Paying women and men equally is the right thing to do and it is a smart business decision. As the national conversation around gender pay equality grew, Gap Inc. executives wanted to know where they stood as a company and decided to invest in a comprehensive study to determine its wage representation.
How does this model practice work?
Starting with Doris Fisher, women have always been vital to Gap Inc.’s success, from store managers to division presidents, from current female global management team members to the women who over the years have run and helped grow each of Gap Inc.’s six brands.
In honor of Gap Inc.’s 45th anniversary, the Pay Equality by Gender Project was initiated. As part of its ongoing commitment to diversity and inclusion, the executive leadership team was 100% supportive of an analysis to determine whether women were being paid equally to their male counterparts. The analysis was completed over a six week period, led by the compensation team and validated by an external firm.
First, the company performed an internal gender compensation analysis by using a geographically sensitive method of comparing employee pay rates in like jobs across its entire organization. A calculation of “equal pay for equal work” is generally recognized by leading economists as the most reliable way of assessing wage equality.
The findings were statistically validated by Exponential Talent, an independent firm that specializes in this work and was recommended by Stanford’s Clayman Institute for Gender Research. Gap Inc. provided a complete dataset of pay information for employees globally (129,992 employees). The data included the following for each employee: annualized salary (in US dollars), gender, full time or part time status (FTE), employee tenure, span of control, level, job code, and geography.
Exponential Talent then set out to test the “equal pay for equal work” hypothesis – that is, determining whether there were significant differences in the average pay of women and men within a similar level and job function controlling for tenure, FTE status, and span of control, an “apples to apples” comparison. Exponential Talent tested the hypothesis globally and within each of the major retail geographical areas of Gap Inc. (US, UK, Canada, Japan, and China).
As a testament to Gap Inc.’s core values, the study revealed that, on average, women employees are paid at a one-to-one ratio compared to their male counterparts across the organization. Globally, this translates to pay equality across major geographies, whether dollar for dollar, pound for pound, yen for yen, or euro for euro. People are paid based on the work they do and the value they bring to the company.
“This is truly so important to share- not only with those who work for the company but with others as well. Perhaps Gap Inc. can inspire other companies to magnify the strengths of ALL employees equally. I am so proud to work for a company that has a foundation based on morality, strength, and teamwork. Thank you, all.”
Senior Sales Associate, Gap
The Exponential Talent analysis found that, controlling for relevant factors, there is no significant gender wage difference between women and men at Gap Inc. within job codes globally and in any of the major retail geographies.
Gap Inc. communicated its proven and sustained commitment to gender equality globally to its employees and posted its position on equal pay at http://www.letsdomore.com/about/.
To learn more about the study, visit http://www.exponentialtalent.com/gap-inc-pay-equity-by-gender-project.html.
How can I adopt this model practice in my workplace?
This type of undertaking requires commitment to inclusion and equality and senior executives to be transparent and willing to take risks. It requires a dedication of time and resources, involving executive leadership and compensation teams. Once that dedication is there, an internal compensation analysis can take place, followed by a trusted third party analysis to validate results.
Evaluate policies and practices to ensure that there are mechanisms in place to support pay equality. At Gap Inc. some key foundational elements that support pay equality are listed below.
• A Code of Business Conduct is ingrained in the company culture. Zero means zero tolerance for discrimination.
• During annual pay reviews, managers are provided with pay ranges and held accountable to decide pay based on performance and proficiency in role. Leadership reviews of annual pay increases and promotions ensure that the resulting recommendations are as intended.
• Ongoing incumbent pay positioning analysis highlights areas to concentrate investment in talent within the organization.
Methodology for Analyses
• To test for equal pay for equal work, conduct a core analysis by identifying distinct jobs in each geography that have both male and female incumbents.
• For each job, calculate a ratio of average or median pay for female incumbents and compare that to the average or median pay for male incumbents.
• Evaluate the results and review by geography, job function, FTE, and level.
• Leverage key data points such as time in position and total organization size (number of people) as indicators to help explain differences.
• Follow up this analysis to determine whether or not any differences are meaningful through significance testing, regression, and effect size analysis.
Gap Inc.’s commitment to inclusivity and equality will continue to guide its practices. The company plans to annually review the pay ratio between women and men.