Income inequality remains a troubling issue, despite years of progressive and proactive approaches and legislation. All too often, workers of one particular group (usually women or people of color) are systematically underpaid across an organization. The remedy for such pay gaps is often to focus on those workers who are most underpaid. This article explains why this approach falls short and how using a structured approach to pay equity analysis will help companies not only address systematic biases, but also address the exact point of pay inequity in their salary structure.
Pay gaps are an enduring and growing source of social tension and management frustration — statistical evidence that workers of one particular group (usually women or people of color) are systematically underpaid across an organization or within business divisions. In recent years, major firms such as Google and Walmart have been sued by women alleging, among other things, that their employers paid them less than men with similar jobs and qualifications.
David Anderson is an Associate Professor of Analytics at the Villanova School of Business. His research focuses on the gender pay gap, specifically how companies monitor and address pay gaps, the downstream effects of gender pay gaps, and the impacts of pay equity and pay transparency legislation. He also is a cofounder of PayAnalytics, a software startup which helps companies measure, address, and monitor demographic pay gaps.
Margrét V. Bjarnadóttir Margret Vilborg Bjarnadottir is an Associate Professor of Management Science and Statistics at Robert H. Smith School of Business at University of Maryland. Her research focuses on how to use optimization and machine learning to address problems of social importance, including pay equity. She is the cofounder of PayAnalytics, which focuses on closing pay gaps and building equitable workplaces.
David Gaddis Ross is the R. Perry Frankland Professor at the University of Florida’s Warrington College of Business Administration. His research examines the governance of firms, with a particular focus on gender issues in top management and the foundations of strategy. Prior to becoming an academic, David worked for over a decade on Wall Street, where he advised governments and firms on mergers & acquisitions, restructuring, privatization, and cross-border tax and accounting arbitrage.
