his happened with some data last week. While analyzing HR data on behalf of a PE fund we work with something really stuck out to me: men earned the same amount as women. Knowing that on average in 2020 women make 81 cents to the dollar of men, I was skeptical of the good news.
I brought this up to the team and everyone had the same thought: is there something wrong with the data? So we went through the steps. First, we checked sources. Then we checked calculations. Those were fine. Everything was in order. We continued.
If we held other factors constant, would different patterns emerge? We hypothesized that there was one company of their dozen in the portfolio skewing the data. Check. Done. No. Next? What about previous rounds of data? Would some outlier stand out? No? What next? How about the industry? What does the industry look like? Through all of this the data still stood.
We had ourselves a finding. Men and women do indeed have pay parity in this fund.
When something stands out, both good or bad it is our job to point it out. Our clients trust us to interpret that information and to know whether it is something worth paying attention to or not. How we communicate this in a way that funds can learn from it is a big part of our work.
Our findings beg the question: why haven’t investors, funds and companies been interested in analyzing their own pay inequities? Gender pay inequity is not new. The data is there if you’re willing to look at it. The facts are knowable and that’s important.
Knowing information makes it harder to ignore. The shifting attitudes that result from knowledge often lead to behavior change in the best cases and hiding your head in the sand or dancing around the edges to give the impression you are doing something in the worst cases. It’s only a matter of time before an investor calls you out.
Recently, an impact investor questioned why going so in depth as to pull information from HR systems was necessary. As a board member and investor they said they trusted the CEO was getting them accurate information around demographics. I wondered if they took the CEO’s word for it on their financials as well. I am pretty sure they still look at the P&L to confirm what they are being told or they wouldn’t still have a job. Why should the impact side of their investment be a matter of trust when the rest of the investment isn’t?
Data is only a starting point. Once you have information and knowledge, what are you going to do about it is what really matters most. We work with our clients to learn this information and then to do better. It is important to get a baseline of information but we can’t stop there if we want to see impact.
Impact will only become a real consideration for investors when the quality and rigor of impact data is on par with the data gathered on the financials of a business. Then decisions can be made and action can be taken to rectify inefficiencies and inequities.
We believe most investors, funds and companies do not want to have practices that are harmful to their people, the planet and the communities they serve. Ignoring the facts that companies contribute to greater societal challenges like the growing wealth gap, gender inequity and many other factors has not worked. It is time for us all to take our collective heads out of the sand and to stop dancing around the edges.
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