From Progress To Parity: How Do We Reduce The 257-Year Wage Gap?

Think of how different the world was two centuries ago. There were no cars on the roads, no planes in the sky. The vast majority of women were relegated to the home; they weren’t leading companies or governing countries, or even voting for that matter. While we can’t possibly predict how the world will look 200 years into the future, one thing is certain: At the current rate of progress, we still won’t have closed the gender pay gap. In fact, the World Economic Forum’s projections show that we won’t achieve gender parity on a global scale until the year 2277 — and that isn’t even taking into account the decades of progress that have been undone by COVID-19. We’ve come a long way, but we must remember how far we have to go.

Our annual Equality Lounge @ Davos looked a little different this year — for one thing, we traded in the snowy slopes of Switzerland for our sofas and computer screens — but the conversations were just as impactful as ever. I [virtually] sat down with Sara Wechter, Global Head of Human Resources at Citi, to talk about why it has never been more important for organizations to take a stand for pay parity. 

Citi is a trailblazer in this respect; in 2019, it became the first U.S. company to publicly disclose its global median gender pay gap. Citi’s commitment to equality is one of the many reasons we chose to collaborate with them to create the Advancing Equality Calculator, a free tool to help organizations of all sizes calculate their raw wage gap and join the movement for pay parity. 

Below is a condensed interview from my conversation with Sara:

Shelley Zalis: Citi took a big step forward in making a conscious decision to disclose its global median gender pay gap. What was the impetus behind that?

Sara Wechter: It really comes down to transparency and accountability. For a firm of a couple of hundred thousand people, if you want everyone to be accountable for making change, they all need to know what they're solving. They need to know what the numbers are and what they're trying to get to — or else you can't drive change. It's great if the CEO knows. It's great if the board knows. It's great if the senior management team knows. But at the end of the day, you need to make sure that the entire company understands.

Four years ago, we were the first bank to disclose our adjusted pay results. At that time, we found that women were paid on average 99% of what men were paid. And every year since, we've continued to measure it — and it's continued to improve. Now, people know it's coming. People look for the memo. People look to understand it and why it really matters.

Three years ago, we became one of the first companies to disclose our unadjusted or “raw” pay gaps for both women and U.S. minorities. That one was a lot tougher, to be honest. The fact that we have a raw pay gap reflects a need to increase representation of women and U.S. minorities in senior and higher-paying roles, which we’re committed to doing.

Zalis: Backing up for a second, can you define adjusted and raw pay gaps?

Wechter: The adjusted pay gap is a measure of "like for like" – comparing the compensation of women to men and U.S. minorities and non-minorities when adjusting for factors such as job function, level and geography. The raw gap measures the difference in median total compensation when we don't adjust for any factors – in other words, take all the women who work at a firm and all the men and find the median compensation, from a branch teller to the CEO. The existence of a raw pay gap reflects a need to increase representation of women and U.S. minorities in senior and higher-paying roles.

Zalis: What started your pay parity journey?

Wechter: Natasha Lamb from Arjuna Capital submitted a shareholder proposal for us to release the data. We heard all of the various conversations, as to why you shouldn't disclose your pay and representation figures, what the disclosure does, why it's anti-competitive. And none of the reasons actually made sense to me. In conversation with Mike Corbat, Citi’s CEO, he said "No, we should do this. It's a great catalyst for change." And we've been doing to it ever since.

Zalis: How does releasing these figures externally translate internally? How do your employees feel about consciously closing the pay gap at Citi now?

Wechter: When we put out the information around the adjusted pay gap and the work that we did, it really brought a lot of pride. And then when we were willing to put out the raw pay gap number, it put so much trust in the adjusted pay gap. People's view was, why would we put out a number like 74% on the raw pay gap? We're being as honest as possible. It gave people faith in the adjusted pay gap, and I would say the overwhelming reaction has been pride.

It's not just about owning our pay gap. We're about to have the first woman CEO of a large bank. Jane Fraser is a rockstar and we’re very excited to see the type of impact she makes. When Mike retires at the end of the month, our board is 50 percent female, 50 percent male. That is not a common thing across most of the Fortune 100 today.

Zalis: Now let's talk about the Advancing Equality Calculator. Why was this important for Citi to support its creation?

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