Companies can 'totally fix' gender pay gap - Google exec

If companies relied less on what people made in their past jobs, and more on the actual market value of the job being filled, they'd be less likely to perpetuate the gap between men's and women's salaries. Photo / Thinkstock

During a recent talk in Washington, Laszlo Bock, Google's "people operations" chief, said something notable about fixing the equal-pay conundrum.

While he acknowledged that men tend to negotiate more than women, he did not suggest - as is often the case - that solving the gender wage gap is simply a matter of women negotiating more. Rather, he said, "large companies could totally fix this problem."

Here's his reasoning. When people start at Google, Bock said, "we figure out what the job is worth, not the person." While that may mean some people take a pay cut while others get a raise, the actual starting salaries for both men and women at Google "are identical or statistically identical," Bock said.

Large companies are the wage setters in this country, he added, so they have the power to fix the issue by paying on the basis of a job's market value. "If you do that instead of starting from where somebody is today, the problem goes away."

Although he wasn't clear how Google determines a job's worth or what kind of salary information Google seeks (the company did not provide more detail on this question when it was requested), his remarks seem to suggest another way companies can do their part to help solve the persistent and enigmatic problem of the gender pay gap: Stop asking, "What's your salary history?"

If companies relied less on what people made in their past jobs, and more on the actual market value of the job being filled, they'd be less likely to perpetuate the gap between men's and women's salaries. After all, when employers base someone's new salary on the person's salary elsewhere, they just compound any past biases or negotiation disadvantages.

'Self-perpetuating'

Unequal salaries can be "self-perpetuating," said Molly Anderson, founder of the consulting firm Exponential Talent. Employees who negotiate higher salaries early in their careers - or are awarded higher pay because of some kind of unconscious bias - benefit for years as they get promotions or take on new jobs.

Higher salaries also have what's known as a "branding" impact. Just as consumers think pricier products are of better quality, recruiters and managers can have the same reaction when a job candidate has a higher past salary, Anderson said. "It may trigger a conviction that one hire is lower quality than another, even if that isn't the reality."

It's such an awkward thing to discuss, anyway. Of all the questions that job applicants hate to answer, the worst may be: "How much did you make in your last job?" Entire corners of the Internet are devoted to helping people tiptoe through this minefield of a topic or to politely decline to answer the question.

Whether the question is about salary history or salary requirements - as many companies put it - throwing out that first number tends to be more stressful and cringe-inducing for women, said Laura Kray, a professor at the University of California at Berkeley. Her research has shown that women are more relieved when the first number they submit in a negotiation is accepted, whereas men are more likely to feel regret.

Negotiation

If more companies were to start with an initial offer and then let the candidate make the case for why more is deserved, Kray said, it could help mitigate the problem.

In other words, the idea of not focusing on salary history or salary requirements doesn't mean there's not then room for negotiation. "Your premise - that we need to get rid of that anchor dragging [women] down over the course if their careers - is correct," said Margaret Ann Neale, a professor at Stanford Graduate School of Business who focuses on gender and negotiation.

Yet "it's not sufficient," she added. There's still the need to negotiate once an initial offer is made. "I cannot say enough about how it's important for people, women and men, to get a good sense of what their jobs are worth."

Companies' role

Companies, after all, have much more than a good sense of what jobs are worth. Most large corporations have reams of highly detailed data on pay ranges for every job imaginable in every geographic region where they operate. Most also already have set a specific range for the job's pay before they start interviewing candidates.

More and more companies are waking up to the idea that they have a role to play in solving the equal-pay problem. Federal contractors now must share compensation data categorised according to gender and race. Shareholder activists are encouraging companies to disclose their wage gaps.

Some companies, including Gap, are having independent firms such as Exponential Talent audit their pay data. Reddit interim chief executive Ellen Pao - Silicon Valley's poster woman for gender issues - recently said she has even taken negotiating out of her organisation's hiring process.

And, of course, smart firms realise that resolving any gender pay gap that exists unfairly in their ranks should help them create a better culture, recruit more talented women and retain the kind of diverse workforce that could help the bottom line.