In 2020, a Pew Research Center analysis revealed women earned 84% of their male counterparts’ earnings. The gap is even deeper for Black and Latina women, who respectively earn 65% and 59% of white men’s earnings. This is not recent news, as the gender pay gap, as we ‘ve traditionally known it, has not changed much in the last 15 years. However, there is an another part of the gender pay gap we don’t often think of or talk about. It’s the equity compensation gap.
The Journal of Applied Psychology recently published a study which found a gap in equity-based compensation awards between genders ranging from 15 to 30%. This equity compensation gap closely mirrors the gender pay gap, taking into account a 20% pay gap in the United States and an estimated 17% gap in Europe. According to an analysis of venture-backed companies’ equity by Carta including over 6,000 companies and 15,000 founders, women were found to hold only 20% of equity despite constituting 35% of equity holding employees. For every dollar owned by male employees, female employees holding equity own just 47 cents. At the founder level, it was found while women make up 13% of startup founders, they only hold 6% of their companies’ equity. For every dollar of equity owned by male founders, female founders only own 39 cents.
While many businesses are striving to address the gender pay gap, they may not be addressing the gap in equity-based awards. As equity-based awards are incentives to retain employees, it can be inferred female employees are not seen as valuable as their male counterparts. Another inference is that women may not be able to build wealth as men do.
Among the factors contributing to the noted gender disparities in equity compensation, is the misinformation or lack of information among employees as related to equity compensation.
To remedy this, here are three ways women can reduce, and possibly eliminate the equity compensation gap:
Talk to trusted colleagues and peers
Male employees often have access to career-related information women may not access, due to not belonging to the same circles. Much of this information points them towards what to negotiate for. This is why it’s important for women to create and nurture their social networks, and talk to trusted peers and colleagues. This is all the more important as women tend to be negatively viewed when negotiating or asserting themselves at work.
Know what to negotiate for beyond salary compensation
Often, women come to the negotiation table without a clear understanding of equity and stock options’ value as related to their overall compensation. Too much emphasis is then put on salary, and not enough on other forms of compensation such as equity and stock options. Understanding this and knowing what (and how) to negotiate for, goes a long way towards reducing equity-based gender gaps.
Advocate for pay transparency
Pay transparency is not only beneficial to employees, but can also help employers identify and remedy existing gaps. As advocates for pay transparency, women can encourage a process whereby female employees have a better understanding of compensation and what to ask for, and where bias is minimized or removed entirely.
All in all, the gender pay gap is more layered and deeply ingrained in the compensation structure than most of us know or realize. Being aware of and proactive about the gender gap in equity compensation can help peel another layer of the pay gap onion, thus reducing the inequity plaguing women at work.
Were you aware of the gender equity gap? If so, how are you fighting it at your level?
In this episode, I discuss how we, as working women and moms, can make a plan to reach our goals this year, minus the stress, disappointment and time wasted…
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In this episode, I delve into 3 tips to transition into the New Year as a woman at work. While we discussed setting goals in last episode, here we dig into the work to do to actually effectively cross the threshold from one year to the other at work.
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Also, leave me a review for the TCS podcast on Apple Podcasts !
Welcome to our #AskACPA feature where we answer financial, accounting and business questions.
Question: As a woman small business owner, what are tips to transition into the new year?
Entering a new year as an entrepreneur, whether you have a side hustle or full-time business, is not just a fresh start, but an opportunity to transition into a more fruitful business season. While it is important to set goals for your business, it is also crucial to effectively make the transition from one year to the other, especially as related to your finances and accounting. This is especially important considering the many disadvantages faced by women-owned businesses as a result of the current COVID-19 pandemic, despite the increase in new entrepreneurial ventures started by women during this period.
As an entrepreneur, how you finish one year, and start another year sets the tone for the future of your business. Many, if not most important metrics by which your business’ performance are measured, including budgets and benchmarks, are set at the beginning of the period. The goals set ahead are also defined at the beginning of the year, which all make the transition from one period to the other a particularly critical time.
If you’re working through your business transition from one year to another as a female entrepreneur, here are a few steps that may help:
Re-awaken your business’ WHY
Before even delving into financial and accounting figures and projections, the first step is to refresh your business’ WHY. That is your business’ purpose, the reason why you started it all in the first place. Your financial and accounting processes are only significant enough to the point where they are aligned with your business’ WHY.
After all, all your financial and accounting performance does is tell the story of your business, defined and embodied by its purpose. It’s the same purpose that ought to drive your strategy, and ultimately your financial results.
What is your business’ WHY? Has it changed from last year to this period? If so, in what ways? Are you still in alignment with it or have you lost sight of it?
Be honest about where you stand financially
This is especially important if your business is on a fiscal year calendar, which means it reports its financial results on a calendar year basis. As such, year-end financial statements and reports constitute an excellent barometer to assess the business’ performance in the course of the prior year.
As you closed the prior year a few days/weeks earlier, where do your business’ revenues stand? Have your revenues increased or decreased in the course of the prior year? How have your business’ expenses changed? What other parts of your financials have been affected? What are the reasons behind these changes, if any?
Being honest about, and understand where your business stands financially, allows you to transition into a new year with a better sense of the modifications needed to further your WHY.
Make a plan
Last but not least, relying on a refreshed sense of your business” WHY, as well as a clear understanding of where your business stands financially, allows you to confirm any goals you’ve set. Even better, it lets you devise a plan to reach these goals in a way that aligns with your business’ WHY, and address any gaps identified when reviewing your prior year performance.
Transitioning into a new year as a business requires a bit of a process. These 3 steps can help smooth out the transition and set you up for a successful year ahead.
Making the transition to a new year can be quite a daunting process. Making the transition to a new year in the midst of an ongoing pandemic, school and daycare closures, a general movement of career resignation, in a time riddled with social and political instability, is a monumentally challenging feat. As we step into the next twelve months of what seems an unending crisis, working moms everywhere are gearing up for yet another difficult shift.
From carrying the brunt of the COVID-19 global crisis, both on the home and career front, to continuing to live with the trauma and angst of disease, school and daycare closures, work layoffs and resignations, the challenges have not diminished for working mothers. Quite to the contrary… Adding to it the ever-continuing debate around paid leave, gender equity, and the need for increased diversity and inclusion at work in general, and many are just waiting to wake up from the longest nightmare ever…
Yet, there are ways organizations and businesses can help to lessen the weight on working moms’ shoulders, while providing an incentive for them to keep and strive in their careers, instead of punishing them for what is largely out of their control. Here are a few suggestions, as we’re starting this new year:
Listen more to working mother’s needs
Much of the structural and cultural foundation of businesses and organizations as we know them have been inherited from a fundamental patriarchal setting. This is a setting which has not allowed for women’s voices to be heard enough in order for the needed structural, cultural and behavioral changes to be put in place and implemented. As an increasing number of working mothers are raising their voices, most notably as a result of the recent pandemic, many are realizing the unmet needs, and resulting pressures on motherhood. Something as simple as creating forums and spaces where working mothers’ voices can continue to be heard can bring about more of the much-needed awareness around what’s truly at stake, as well as ways to remedy these issues.
Hire and promote more working mothers
This involves removing barriers, and opening doors of opportunity for working moms to reach levels of influence where their combined experience, knowledge and acumen can create positive change for other working mothers. It’s also a matter of acknowledging the often unconscious bias standing in the way of working mother’s hiring and promotions, including but not limited to the broken rung, glass ceiling, and gender pay gap…
Offer flexible options…
As has been shown during the pandemic, strategic, well-managed flexibility does not hinder employees’ performance, but rather can increase it. Flexibility for working mothers is essential to manage the various areas of their work and life, which makes it important for businesses and organizations to offer these options.
…but don’t punish them for choosing flexibility
However, there is often a negative bias associated with flexible work options, especially when these are taken advantage of by working mothers. The latter are often assumed not to be able to handle the demands of motherhood and work, thus unfortunately in many cases being sidelined for advancement or not considered leadership material. The proverbial “mommy track” has been dubbed as such in reference to the lessened career advancement opportunities offered to working mothers taking advantage of flexible work options or reduced work hours for greater work-life balance.
Review current policies and procedures
Many, if not most, organizational and business policies and procedures are not specific enough to cover the needs of working mothers. Neither do they consider the range of issues that can affect a working mom parenting in circumstances as dire as a global pandemic, such as having to work from home with a sick kid, for instance. Reviewing current policies and procedures, at least on an annual basis, can help identify gaps that can be remedied in the short or long-term.
Revisit the company’s culture
Last but not least, much of the existing gender bias, inequities and inequalities are embedded in organizational and business cultures that have been prevalent for a very long time. While it may not be written or documented anywhere, the organizational culture is an important indicator of the way employees, including working mothers, are perceived and treated. Revisiting it can help in understanding the barriers standing in the way of working moms, especially in the midst of the current pandemic, and devise ways to lessen or eliminate these entirely.
What are other ways for organizations to help working moms this year?
