Why salary analyses make sense

The fact that equal pay should be awarded for identical and equivalent work is largely undisputed in Switzerland. So why do we continue to find inexplicable differences between the wages of men and women? How might salary analyses help to shed light on the darkness?

Gender equality has been firmly established in the Swiss Federal Constitution since 1981. Equal pay is an important part of this, as can be seen in Article 8: “Men and women have the right to the same wage for equivalent work.” Yet salaries still differ by an inexplicable 7.4 per cent. Per person and year, this equates to around CHF 7,000. Customary attempts to explain this gap range from “Women themselves are to blame, as they are poor negotiators and work in the wrong sectors” to doubts about the meaningfulness of various methods and subsequent discussions about the accuracy of the percentage points behind the decimal point.

When it comes to wage equality, one normative issue is key: fairness and justness. What we consider to be fair and just arises from social discourse and this changes over time. When I came to Switzerland in 1989, a female colleague explained to me with absolute conviction that it was perfectly fine that her male colleague earned more than her despite doing the same job. After all, he was the breadwinner of his family and she wasn’t. Article 8 of the Federal Constitution already existed at this point, but admittedly the Federal Act on Gender Equality (1996) did not.

Two years ago, an applicant for our “Women Back to Business” programme responded as follows to the question of what she never wishes to experience again in a job: her manager had refused to pay her the bonus she was due because he said that her husband earned enough already. Even some of my younger colleagues still use the “part-time” argument frequently as justification for an inferior salary grade. The concepts of the “male breadwinner” and the “female secondary earner” are still unconsciously established in our minds and make a not-inconsiderable contribution to the wage discrimination that continues to exist.

In our projects in the Competence Centre for Diversity and Inclusion within the Research Institute for International Management at the University of St. Gallen, we see the effects of such concepts when we undertake in-depth analyses of corporate salary data: part-time workers frequently earn significantly less than full-time workers. In Switzerland, the majority of such workers are women. Internally we refer to the “part-time penalty” that exists not only with respect to wages but also in performance and potential evaluations. If, for instance, identical job groups and requirements are compared, this difference cannot really be justified. Wage differences are also evident in connection with marital status. Married men earn significantly more than others. It is likewise possible to find major salary differences between nationalities (natives versus foreigners) and language groups. Once all plausible explanations have been investigated, i.e. when all other variables have been accounted for in the analysis model, the assumption remains that it is a case of conscious or unconscious discrimination.

The inexplicable part of salary differences within a company often relates to personal characteristics such as employment percentage, their origin and their marital status. To eliminate such differences, executives, HR managers and employees need to be sensitized. After all, we all have so-called “unconscious biases”. If, for example, someone speaks German poorly, we immediately assume a lack of intelligence. We automatically assume that women with children are not career-oriented, and we assign stereotypical characteristics and traits to certain nationalities. All of these ideas ultimately influence performance evaluations, promotions and wages. We overlook talented individuals who might otherwise contribute substantially to corporate success.

Sophisticated salary analyses carried out by external parties are thus a very important step in uncovering such unconscious biases. Following on from these, it is crucial to implement the right measures and to check whether these are bearing fruit. Success is evident if such unconscious biases are diminishing and ultimately disappearing – alongside the inexplicable part of salary differences.

The much-maligned LOGIB testing tool, which is provided free of charge by the Federal Government, is one block on the road to non-discriminatory wages. It does not solve all problems by any means and is also only suitable for companies with more than 50 employees. The limited number of criteria is also a limiting factor, but it does indicate every individual who has an unexpectedly high or low salary according to the model. Those responsible within companies can thus check whether there are other explanations for such “atypical” salaries (e.g. the person might have a degree, but it may be of little relevance for the position). If there are no plausible explanations, the salary must be corrected. At the Competence Centre for Diversity and Inclusion, we carry out more in-depth salary analyses that take into account additional criteria. Areas where action is required are demonstrated to companies more clearly, meaning that they know where they need to make improvements.

In the battle for well-qualified and motivated high potentials, managers and specialists, companies can gain an edge by actively ensuring transparency, fair wages and equal opportunities. All businesses – whether SMEs or large corporations – should act today and not wait until they are faced with legal sanctions.

 

Photo by Les Anderson on Unsplash

 

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