How to Solve the Pay Disparity Dilemma

John Krautzel
Posted by in Retail •


In November 2015, the World Economic Forum revealed that the economic gap between women and men could take more than 118 years to close. Although reports show that the pay disparity is narrowing, it is climbing at a slow rate, with women earning what men did more than a decade ago. In the United States, the gap in pay reveals that women earn about two-thirds of what men make in the same industry, with the U.S. ranking 74 in wage equality when compared with 145 countries. Efforts to solve the pay disparity dilemma remain in the hands of company administrators. Find out how you can help speed up the process.

Pay disparity is not just a problem that impacts gender alone. Departments within companies experience disparity. For example, a sales department may generate more income based on commissions with operational and support staff who provide the resources for the sales department unable to reap the monetary benefits. As a result, morale is affected, employees may become less loyal to the company and the turnover rate increases.

Proven Strategies That Work

Work to close the pay gap by proposing incentive programs that spread sales revenue across multiple departments. For example, automotive dealers have offered incentives to sales professionals who cooperate with support staff. When customers are retained by the support staff after a sale is processed, both employees receive commissions or bonuses. Another example that helps to minimize the disparity dilemma includes switching sales staff to salaried employees. Both support and sales staff receive equal pay, they work together to close sales, recruit and retain customers, and reap the same amount of monetary benefits. Adding bonuses on top of salaries for all employees can increase motivation for departments to work together more cohesively.

Research Potential Disparities

Change is inevitable in order to minimize pay gaps. You have to put in time and effort to research the current pay structure to assess whether or not it is discriminatory. Hire a third-party company to review compensation trends for your workforce, or conduct an investigation in-house. Pull employee records, and sort pay information according to positions, age, sex, race and tenured status. The results may reveal that certain positions have historically made more money. Examine the variables, and evaluate why the disparities exist.

Identify Biases

It can be challenging to look closely at the reasons why pay disparities exist, but as a supervisor or manager, it is your responsibility to ensure employees have equal opportunities. Identify biases that have contributed to pay disparities in the past. Evaluate your own assumptions, and ask for feedback from current employers and fellow supervisors.

Evaluate Compliance Regulations

The last thing your company needs is a lawsuit due to pay disparities. Review fair pay regulations established by the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964 and the Lilly Ledbetter Fair Pay Act of 2009 to make sure you are following federal guidelines when establishing a pay schedule. Your company's pay equity should mirror these regulations. If you see disparities in your research, request the assistance of legal counsel to change your practices and procedures.

Overhaul the Employee Pay Structure

Once you have evaluated the pay structure for your employees, implement changes that eliminate disparities. It may be apparent that some positions pay more because the workload is heavier. Adjust the workloads, distribute the work evenly and sync the salaries to help close the gap. You may have some resistance from long-term employees, but ultimately, changing the pay structure so it is fair for all involved is a long-term strategy that benefits your company and attracts new talent.

It's no secret that the goal of a company is to increase sales and boost productivity, but when pay disparities affect morale or attack the integrity of your company, you need to spend ample time evaluating how to provide fair opportunities for all employees. As a result, when your system is fair to people of all ages, gender, races and skill levels, your company is likely to attract the best talent and project a positive image.

Photo Courtesy of Cathy Cox at Flickr.com
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  • Abbey Boyd
    Abbey Boyd •

    If a person is earning commission because they are making sales, such as in the example of the car salesman, is it really fair that support staff share in that extra income? A salesman has to work hard to reel the customer in and make the sale, so isn't it fair that they get the reward? I just wonder how many people actually view this as a form of pay disparity, based on the work actually performed.

  • Jay Bowyer
    Jay Bowyer •

    In my experience, one of the best things we can do to close the wage gap — if we're in a hiring manager position — is to fight for equal wages for new hires from the get go. As a hiring manager for a major Fortune 500 company, I certainly had the ability to advocate for new hires with my own managers and with the company HR department. Men and women in my district were hired at an equal pay rate because I wouldn't tolerate anything less than that.

  • Nancy Anderson
    Nancy Anderson •

    Thanks for the comments. @William sounds good - in theory. But I wonder how many audits are really performed on HR to determine if there is discrimination between sexes. @Shannon I totally agree that recognizing long-term employees as well as those who are performing above and beyond expectations should be looked at for possible pay increases. But I have to wonder if those pay increases are equitable across the board or if the male employees receive more of an increase than the women?

  • William Browning
    William Browning •

    Regular audits of HR can find disparities and biases so employers can create strategies to improve pay disparity. Getting to the heart of a company's data lets businesses discover if pay disparities truly come from sexism in the workplace or other factors such as experience, degrees, certifications or skill sets.

  • Shannon Philpott
    Shannon Philpott •

    Pay disparities are clearly an issue, but overhauling the pay structure may be too extreme of an approach. I think that recognizing long-term employees and those who are positively contributing to overall operations is a good strategy, but aligning the pay for others who are not producing negatively affects morale.

  • Nancy Anderson
    Nancy Anderson •

    @Jane this is always a sticky situation. First of all, employees should never discuss pay with each other. That is a definite no-no. If you were to go to your manager and ask for a pay raise - what justification would you use? You can't say that you know that Joe's paycheck is greater than yours because talk about pay in the workplace is taboo! If you truly believe that you are being discriminated against because the men receive more pay for the same job - certainly you can ask for an investigation. But truly - it will not be appreciated and I would guess that the company would find some nefarious excuse to let you go. Such a sad commentary on our times but there it is.

  • Jane H.
    Jane H. •

    I used to work for a company that offered prizes to the top people. The base pay wasn't great, so I was driven to earn those prizes. Getting them was just window dressing; the real benefit was from earning commissions on the sales that got me to the prize table. However, no matter how hard I worked, I was aware that there were a couple men who did just a little better than me on their paychecks, even though everything else was about even. How likely is it that an employer will find some unrelated reason to let an employee go if they ask for an investigation of a suspected pay disparity problem at the company?

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