6/10/2020 Update: In the days between the writing and publishing of this piece, the world has changed yet again. Though my own research and expertise have focused on gender equity, organizations and leaders must look to address all forms of inequity in the workplace. Many of the risks and solutions outlined below are relevant beyond gender equity, and as such, I’ve made edits to highlight those cases.
In the current unprecedented environment, companies are struggling to address multiple large-scale issues at once – the health and safety of workers, cash flow, volatile stock markets, and civil unrest that may further disrupt operations. It seems an impossible ask to add yet another issue to this list, yet COVID-19 threatens to bring us to an inflection point for workplace gender equity. The conscientious and strategic consideration of workplace equity, or lack thereof, of US business leaders during this time will determine the direction of that inflection.
Why does COVID-19 present a threat to workplace (gender) equity?
Industry representation. While few industries are completely immune to the pandemic, women represent a disproportionately large share of jobs in many of the industries that have been worst hit. Based on statistics from the International Labor Organization, 53% of women worldwide in the informal economy (defined as wage workers in unprotected jobs) are in industries at the highest risk of being affected by the pandemic. The same is true for only 44% of equivalent male jobs. These high to medium-high risk industries include accommodation and food services, real estate, arts, entertainment, recreation, and communication. Hispanic employees have also been particularly hard hit through the shuttering of hospitality and food service businesses, with the US Hispanic female unemployment rate recently reaching 20.2%.
The pandemic is also expected to accelerate the existing trend towards task automation. Not only are women and minorities over-represented in industries that have already experienced and are likely to continue to experience the highest levels of reduced employment, but many of these industries also face a future of permanent role reduction as workers are replaced by technology.
Caregiving. COVID-19 has led to a chronic shortage of caregivers in many places due to new coronavirus related illnesses or circumstances preventing professional caregivers from performing their duties. Additionally, schools and childcare centers across the country have been shuttered. These strains on the healthcare and childcare systems, in addition to the quarantine recommendations under COVID-19, mean that more employees are expected to need time off to care for a sick family member or a child. In the United States, approximately 75% of family caregivers are female, putting the female employee population at significantly greater risk of needing to take a part or full-time work absence in order to care for a family member. The “caregiving risk” applies more broadly to minority employee groups as well; because African Americans and Hispanics have seen a greater rate of serious cases of COVID-19, they are also at higher risk of requiring leave due to illness or to care for an ill family member.
Workplace bias. Despite ongoing inclusivity initiatives, workplace biases towards women remain, and may be exacerbated in times of crisis. A man’s reputation in the workplace, for example, tends to actually improve when they are seen providing childcare for their family. A woman’s reputation, on the other hand, suffers, and doubts about her capabilities and commitment increase. It is also well documented that women have less direct contact with their superiors then men, and significantly less so for women of color. Less personal contact and relationship building are shown to impact promotions and compensation in times of non-crisis, and risk impacting the selection of women for furlough or lay-off, even when the woman’s job performance is equal to or better than that of her male counterparts. It also means that in a world of more ad hoc virtual meetings, women are more likely to be left out of ad hoc conversations.
Corporate boards now largely acknowledge the importance of diversity. Yet at other levels of the organization, despite evidence to the contrary, a biased view may persist that male employees perform better during a crisis and under pressure. Concerns about the fact that female employees may face increased childcare or caregiving responsibilities can impact decisions to hire or keep women employees. And at certain levels of an organization, male employees are more likely to negotiate for compensation. And while African American males have statistically negotiated at similar rates to White males, some studies indicate that African Americans who negotiate are perceived as having “pushed too much”, and actually receive a lower base salary. Exit package design or hiring policies without clear guidelines leave room for results where male and non-minority employees receive higher levels of compensation when both joining and exiting the organization.
What can business leaders do to remove the equality threat posed by COVID-19?
Hopefully, we’ve reached the peak of the negative economic impact of COVID-19. As economies begin to reopen, we as business leaders face a tremendous opportunity to address the setbacks that have occurred to gender equity and to build the frameworks that will improve workplace equity going forward. As the pandemic has accelerated the adoption of other trends such as remote technologies and automation, now is the time to also accelerate gender and cultural equality initiatives.
Embrace flexibility. Flexibility has long been identified as an unmet need for female leaders and employees. As the world adjusts to a remote work environment, many businesses have found that not only has productivity not dropped, in some cases it has improved. Large corporations like Facebook and Twitter have announced a permanent shift to more remote work. Along with this shift comes the opportunity for flexible work as well. As your organization adjusts and ramps up to the new normal, supporting women employees and leaders may mean embracing greater work flexibility. While key meetings can require (virtual) attendance, consider allowing employees to choose their concentrated work time, whether a standard 9-5, or early in the morning and after children are in bed. The current environment has shown us that the historic concern that employees won’t deliver of their own initiative on a non-traditional schedule is largely unfounded. While certain roles, by their nature, may not allow for flexible schedules, it’s time to develop policies and programs for remote and flexible work that support, rather than penalize, women employees and leaders.
Build objective (re)hiring and evaluation processes. As certain market shifts and behavior changes like reduced business travel become permanent, some industries may yet face additional hardships and layoffs. Others will begin to rehire in the coming months. In all cases, organizations will be looking to retain the best talent at the lowest cost. If these processes are not conducted with the utmost rigor and objectivity, there is a great threat of a widening gender and minority equity gap with regards to both representation and compensation. In the 2019-2020 OptionTrax Gender Equity in Equity Compensation study, for example, we found that, pre-crisis, within the same organization, female equity award recipient received on average ~50% the number of equity awards as male plan participants.
Business leaders, hiring managers and HR departments should review the processes and policies related to hiring, promotion and terminations. In addition to interviews for hiring, having a group of non-interviewers perform “blind” resume and work sample reviews (i.e., without candidate identifying information) can provide an unbiased counterpoint to interviewer impressions. The same is true for both promotion and termination performance evaluations. As the manager level is where representation of male vs. female and White vs. minority employees begins to skew, review and evaluation training for managers should include recognition of possible unconscious biases and mitigating strategies. Lastly, negotiation should be limited – the delivery of compensation levels should be tied to the qualifications and performance of the employee, rather than the squeakiness of the wheel. Particularly as millennials, who identify strongly with organizations that display a sense of meritocracy and fairness, increasingly drive the labor force, I suspect that a blanket policy of merit-based, rather than negotiation-based, compensation will be expected of organizations that attract and retain top talent. Of course, there must always be room for qualitative review, but creating clear and objective criteria and processes around hiring, evaluation and termination is the minimum bar for delivering workplace equality.
Require inclusivity. In 2009, McKinsey & Company found that companies with at least three women on the board delivered better organizational performance through the 2008 economic crisis then those without female representation. Particularly in a crisis, a diverse set of views and opinions helps to bring the broadest perspective and set of solutions to the table. While the increased flexibility of remote work may support gender equality, there is also a potential downside – in a crisis where decisions need to be made quickly, it may lead to a closing of ranks. Instead of giving in to the instinct to only gather your closest colleagues, now is the time to make sure that all voices are actively included. Data show that contributions from female employees are more likely to be overlooked, and both female and minority employees report that their expertise is more likely to be questioned. It’s even easier to miss or downplay contributions in a virtual setting. To mitigate this, work with managers and leaders to make sure that all contributions are documented and acknowledged, and that meetings are held with all relevant team members rather than smaller ad hoc groups. It’s also the perfect time to survey employees about the challenges they are facing, and what tools and engagement they need in order to not only deliver during the pandemic, but to drive corporate success for the future.
On a related note, as I’ve written previously, equity compensation is a powerful tool for combating inequity in the workplace. Equity awards provide the sense of ownership and long-term engagement that women leaders often report is lacking. The inherent performance-based nature of equity compensation provides an equal outcome for all employees for multiple years. Ensuring that all employees are equally participating in equity compensation plans is a step towards building connectedness and increasing retention of diverse talent, particularly at leadership levels.
As the future remains uncertain, organizational leaders are spread thin and focused on driving through the current crisis. Dropping the ball on workplace equity now, however, will have a lasting and irreparable impact for years to come. Instead, now is the time to embrace changes brought on by the current crisis in order to support and engage female and minority employees and leaders to build a more equitable workplace of the future.
-Elena Thomas, MBA, CEP
Chief Operating Officer
If you’d like to discuss any of these topics, or are interested learning more about the OptionTrax Gender Equity in Equity Compensation Study and benchmarking, please feel free to contact me directly on LinkedIn. And keep an eye out for our upcoming publication of the OptionTrax Gender Equity and Equity Compensation e-book!