The Advisors' Blog

– Lynn Jokela

Liz blogged last fall about the Business Roundtable’s statement encouraging voluntary public disclosure of key diversity metrics.  In the statement, the BRT also called for closing pay gaps.  In terms of what companies are doing to close pay gaps and how they’re doing, a Pearl Meyer study provides some insight.

Although most companies participating in the study indicated that D&I, gender pay equity and closing the gender pay gap were either “important priorities” or “among a company’s highest priorities,” the study found a disconnect with results from programs and actions that can begin to close gender and minority pay gaps.  In fact, the study found only a small percentage of companies are choosing levers that can actually lead to closing of this gap.  There are opportunities for improvement though as the study suggests different levers to measure outcomes, here’s an excerpt with some of the findings:

– Less than half measure D&I outcomes (44%) with the most widely used measure being number of diverse hires (74%), which is a lagging indicator.  Measuring outcomes in the talent pipeline, including number and percentage of diverse applicants and promotions of diverse staff, can be better leading indicators of D&I outcomes.

– One area presenting a big opportunity to impact D&I are internal training and development programs and formal processes to increase female and minorities in management and/or executive positions – there’s a lot of potential upside here as just 13% have a process in place to increase female and minority representation in management and/or executive positions.  One lever that isn’t reported as often as might be expected is a requirement of diverse candidates in the preliminary and final slates of candidates, just 17-20% of respondents used this lever

– Measuring D&I progress can be more powerful when combined with prioritizing and holding leaders accountable for progress – a small percentage of firms tie D&I outcomes to incentive pay (8.5%), with most being organizations with revenues/assets of $3 billion or greater and for those that do tie incentives to D&I outcomes, the CEO, executive team and CHRO are all held accountable through a variety of short- and long-term incentive plans

Sharing information with the comp committee or the board is one way companies can move things forward and it’s another area with room for improvement. The study found almost 70% of organizations share D&I information with the board.  But in terms of the information shared, there’s wide gulf between those that share general information about overall gender and minority representation (85%) and those that share pay equity (34%) and pay gap (17%) information.