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Bridging the Gender Pay Gap

By Daniel Butcher
February 1, 2021

Ethical companies scrutinize their compensation structure to ensure that they aren’t perpetuating the gender pay gap.

 

Ethics isn’t exclusively about avoiding scandals and stamping out misconduct. It’s also important to examine your organization’s policies and procedures to ensure that they’re in line with core values, such as honesty, fairness, objectivity, and responsibility—the four overarching ethical principles in the IMA Statement of Ethical Professional Practice. Many management accounting and finance professionals are involved in their company’s recruitment efforts and hiring and compensation decisions. Senior leaders can work to reinforce that, as an ethical organization, the company has zero tolerance for any discrimination or inconsistency that could be interpreted as unfair based on employees’ gender, sexual orientation, race, ethnicity, and so on.

 

THE GENDER GAP

 

In the third quarter of 2020, women were paid $0.82 for every dollar paid to men, according to the U.S. Census Bureau and the Bureau of Labor Statistics. In Australia, the full-time base salary gender pay gap was 14% as of May 2020—women’s average weekly ordinary full-time earnings across all industries and occupations were $1,558.40 compared to men’s $1,812.00, according to that country’s Workplace Gender Equality Agency and the Australian Bureau of Statistics.

 

Worldwide, the average country (weighted for population) is 68.6% of the way toward parity, but a 31.4% average gender gap remains to be closed globally, according to the World Economic Forum (WEF) Global Gender Gap Report 2020.

 

Women’s participation in the labor market is stalling, and financial disparities are slightly larger on average, which explains the step back charted by the Economic Participation and Opportunity subindex in 2020. The WEF found, on average, only 55% of adult women are in the global labor market, compared to 78% of men, while more than 40% of the wage gap (the ratio of a woman’s wage to that of a man’s in a similar position) and more than 50% of the income gap (the ratio of women’s total wage and nonwage income to that of men’s) still need to be closed worldwide. The issues requiring resolution are numerous, broad, and complex.

 

“The accounting profession continues to miss the point—a conversational focus on gender pay equity will not solve their issues regarding retention and promotion of women and other diverse professionals,” said Margarita Maria Lenk, associate professor of accounting at Colorado State University’s College of Business and a CMA® (Certified Management Accountant).

 

EXODUS OF PROFESSIONAL WOMEN

 

Even as diversity increases in some industries such as healthcare and education, Lenk asserts that the accounting and finance profession has made little to no progress on equal pay or equal promotional paths, nor have industry organizations revised their statement of professional ethics to include a fair-pay provision. Lenk believes that women will continue to leave the profession as they choose to use their talents and skills in other career paths with more respect for their contributions, fairer pay, and better work-life balance.

 

According to a 2019 CNBC and LinkedIn survey about the financial services industry:

 

  • Almost two-thirds of women polled said female employees are less likely than men to reach leadership roles;
  • Only 40% of women (compared to 75% of men) agree that the genders working at the same level are paid equally at their company;
  • 19% of women and 12% of men said the biggest obstacle is a lack of women in leadership positions; and
  • 14% of women surveyed said their biggest obstacle is a lack of mentorship or sponsorship.

 

Women will notice professions that demonstrate ethics and care about female professionals, and when the professional leadership authentically exhibits an interest in women’s progress by addressing the root causes of women’s departures, such as obstacles to work-life balance and an unfair, and thus unethical, compensation structure.

 

“Let’s change leadership’s framing of, and commitment to, correcting this tragic reality. Let’s change the professional ethics statements so that they speak directly to diversity values. Let’s add consequences to diversity biases,” Lenk said. “That’s the only way to sustainably change the culture and attract and keep the best professional women.”

 

Lenk invites all accounting students who aspire to enter the profession to respectfully and clearly ask for evidence of equity in pay and promotional paths at the company before they accept a job. That will give them an indication of whether they’re joining an ethical organization dedicated to fairness.

 

POTENTIAL SOLUTIONS

 

The American Association of University Women (AAUW) issued a 2020 update to its report on the gender pay gap in the United States that recommended solutions to the problem. For one, state and federal laws eliminating the use of salary history in the hiring process are having a positive effect, with workers who changed jobs in these jurisdictions seeing significant increases in average pay compared to similar workers in states without bans, according to the AAUW. The AAUW recommends that employers conduct regular pay audits, post salary ranges for jobs, eliminate the use of salary history in setting wages, and prohibit retaliation against employees for discussing, disclosing, or inquiring about wages.

 

The European Commission’s EU Action Plan 2017-2019: Tackling the gender pay gap was organized around eight primary action items: improving the application of the equal pay principle; combating segregation in occupations and sectors; breaking the glass ceiling by addressing vertical segregation; tackling the care penalty; better valuing women’s skills, efforts, and responsibilities; uncovering inequalities and stereotypes; alerting and informing about the gender pay gap; and enhancing partnerships to tackle the gender pay gap.

 

Further, especially during the pandemic, workers need additional support to battle economic insecurity and avoid career setbacks, and women often shoulder more of the load when it comes to domestic labor. Ethical executives have the opportunity to advocate for adequate paid leave, reliable childcare, expanded unemployment compensation, a higher minimum wage, nutrition and food assistance programs, housing assistance, and student debt relief.

 

IMA ETHICS HELPLINE

 

For clarification of how the IMA Statement of Ethical Professional Practice applies to your ethical dilemma, contact the IMA Ethics Helpline.

 

In the U.S. or Canada, dial (800) 245-1383. In other countries, dial the AT&T USA Direct Access Number from www.usa.att.com/traveler/index.jsp, then the above number.

 

The IMA Helpline is designed to provide clarification of provisions in the IMA Statement of Ethical Professional Practice, which contains suggestions on how to resolve ethical conflicts. The helpline cannot be considered a hotline to report specific suspected ethical violations.

 

Daniel Butcher is the finance editor at IMA. You can reach him at daniel.butcher@imanet.org.
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