Leadership

How Women in Leadership Are Advancing Pay Equity?

The fight for pay equity in leadership roles has been ongoing for decades. Despite significant progress in recent years, gender inequality still pervades many industries, especially at the top.

Pay equity, or the concept that women and men should be compensated equally for equivalent work, remains elusive for many female leaders. In fact, women in leadership roles often face greater pay disparities compared to their male counterparts, especially in higher-ranking positions like the C-suite.

In the U.S., only 8.8% of Fortune 500 companies have female CEOs, and the pay gap between men and women in leadership positions is still significant. On average, women in the U.S. make just 82 cents for every dollar earned by men, but this gap can be even wider when factors like race and ethnicity are considered.

However, women leaders are making strides to close this gap. Female CEOs, senior executives, and other leaders are championing initiatives that prioritize pay equity and create a more inclusive workplace. Through these efforts, the conversation around pay disparity is shifting, and more companies are taking active steps to address this issue.

In this article, we’ll explore how women in leadership are advancing pay equity, the barriers they still face, and the concrete actions being taken to ensure fair compensation across the board. Keep reading to learn about the initiatives shaping a more inclusive and fair workplace for everyone.

  1. The current state of pay equity
  2. Key initiatives advancing pay equity
  3. Pay equity vs. pay equality
  4. Why does gender diversity matter?
  5. What needs to change to overcome barriers in pay equity?
  6. How companies can implement pay equity policies?
  7. Pay equity for women of color: addressing intersectional disparities
  8. Continuing the journey toward pay equity

The current state of pay equity

Globally, the gender wage gap persists, with the World Economic Forum predicting that it will take 131 years to achieve full parity. In the United States, progress has been made, but the gender wage gap still sits at about 18%. This figure, however, doesn’t tell the whole story. For women in senior leadership roles, especially in male-dominated industries, the wage gap tends to be even larger.

Key statistics:

  • In senior executive roles, women earn an average of 70% of what men earn in similar positions.
  • Only 1.4% of Fortune 500 CEOs are women of color.
  • The gap widens significantly in sectors like finance, tech, and health care, where male dominance in leadership is the norm.

Although pay equity has gained increased attention, many companies still lag in addressing these disparities. Women of color, in particular, face compounded barriers due to the intersection of race and gender inequality, underscoring the need for more inclusive efforts to close the wage gap.

Key initiatives advancing pay equity

To tackle the persistent issue of pay disparity, many companies and governments have implemented initiatives designed to close the gender wage gap. These efforts range from corporate policies aimed at gender equity to government legislation requiring transparency in pay practices.

Corporate initiatives

Major companies like LinkedIn, Salesforce, and Netflix are leading the way in pay equity by conducting regular pay audits and adjusting salaries to ensure parity. LinkedIn, for instance, has committed to promoting gender equity across all levels by investing in mentorship and professional development programs for women.

Salesforce CEO Marc Benioff famously took action when he discovered that female employees at his company were being paid less than their male counterparts. By conducting a company-wide salary review and committing to equal pay for equal work, Salesforce became one of the first tech companies to actively address this issue.

Government action

Legislative efforts in California and New York have also helped reduce pay disparities. California’s Fair Pay Act requires companies to provide equal pay for substantially similar work, while New York’s Pay Equity Law promotes transparency by requiring companies to disclose salary ranges in job postings.

These laws are setting the stage for broader efforts across the U.S. to promote gender equity in compensation.

Global efforts

Iceland has taken drastic measures to ensure pay equity by making it illegal for companies to pay women less than men. The law requires businesses to prove they are paying employees equally for similar work, setting a new standard for global pay equity initiatives.

equally for similar work, setting a new standard for global pay equity initiatives.Initiatives like this have been instrumental in pushing the pay equity conversation forward, but there’s still much work to be done.

Pay equity vs. pay equality

While the terms “pay equity” and “pay equality” are often used interchangeably, they represent two distinct concepts.

  • Pay equality focuses on ensuring that individuals performing the same or similar work receive the same compensation, regardless of gender, race, or other factors. 
  • Pay equity goes beyond equal pay for equal work — it addresses the systemic barriers that may prevent women and other underrepresented groups from accessing higher-paying roles. Pay equity is about fairness in the structure of compensation, ensuring that everyone has equal opportunities to advance and be compensated fairly, regardless of their position.

Why does gender diversity matter?

Gender-diverse leadership drives business success and fosters a more inclusive work environment. Here are some of the ways:

  1. Improving profitability. According to a McKinsey report, companies with gender-diverse executive teams are 21% more likely to outperform their peers in terms of profitability.
  2. Enhancing innovation. Diverse leadership teams bring varied perspectives, often leading to more innovative solutions and ideas.
  3. Improving decision-making. When leadership includes women, the diversity of thought and experience helps teams make more well-rounded decisions by considering a broader range of potential solutions.
  4. Increasing employee satisfaction. Gender diversity fosters a more inclusive company culture, which is linked to higher employee retention and job satisfaction.

Several Fortune 500 companies have demonstrated the value of gender-diverse leadership as well. PepsiCo, under the leadership of Indra Nooyi, achieved significant financial growth while prioritizing diversity and inclusion. Accenture and IBM have also prioritized gender diversity in leadership, resulting in stronger financial performance and a more inclusive work environment.

The business case for gender diversity is clear: companies with more women in leadership roles tend to perform better, are more profitable, and have stronger employee engagement.

pay equity for women

What needs to change to overcome barriers in pay equity?

Achieving pay equity requires addressing the systemic barriers that hold women back. One of the most significant barriers is the motherhood penalty, which refers to the career setbacks women often experience due to caregiving responsibilities.

Women are more likely than men to take time off work or work reduced hours to care for children or other family members. This not only limits their career advancement but also contributes to the wage gap. In addition, women who return to work after caregiving often face biases that affect their pay and promotions.

Solutions to overcoming these barriers include:

  • Flexible work arrangements. Companies should offer flexible hours, remote work options, and part-time schedules to help women balance work and caregiving.
  • On-site childcare. Offering on-site childcare or subsidies for childcare can help retain women in leadership roles.
  • Caregiving support. Policies that provide paid family leave and support for caregiving responsibilities can prevent women from being penalized for taking time off work.

Addressing these barriers can create a more inclusive environment that supports the retention and advancement of women in leadership.

How companies can implement pay equity policies?

Implementing pay equity policies is crucial for companies committed to creating fair and inclusive workplaces. While achieving pay equity requires effort and commitment, there are concrete strategies that employers can adopt to close the gender wage gap and ensure that all employees are compensated fairly for their contributions.

Steps companies can take include:

  • Conducting regular pay audits. Pay audits help identify any disparities in compensation and allow companies to adjust salaries to reflect equitable pay for all employees.
  • Promoting pay transparency. By sharing salary ranges and being clear about how pay decisions are made, companies foster trust and help reduce bias in compensation practices.
  • Diversifying hiring and promotions. Actively seeking diverse candidates for leadership roles can lead to more equitable representation and opportunities for women and other underrepresented groups to advance.
  • Creating an inclusive culture. Leaders need to build a company culture that values diversity and fosters an environment where all employees have access to the resources and support needed for success.

With these strategies, companies can take meaningful steps toward achieving pay equity and fostering a more inclusive workplace.

Pay equity for women of color: addressing intersectional disparities

Women of color, particularly Black and Hispanic women, face even greater wage gaps than other women: Black women earn only 63 cents for every dollar earned by white men, and for Hispanic women, it’s 58 cents. This reflects deep-seated systemic issues that go beyond gender alone.

The wage gap for women of color is driven by a combination of factors, including bias, discrimination, and unequal access to opportunities. Women of color are also underrepresented in leadership roles, which limits their ability to advocate for themselves and others.

Despite these challenges, women leaders of color are advocating for policies that promote intersectional equity. They are pushing for more diversity in leadership teams and promoting inclusive policies that benefit all women.

For example, Thasunda Brown Duckett, CEO of TIAA, advocates for both gender and racial equity by implementing pay transparency policies and promoting leadership opportunities for women of color. Under her leadership, TIAA focuses on intersectional diversity, ensuring that compensation practices are fair and inclusive across all demographics.

Organizations are beginning to recognize the importance of addressing intersectional disparities, with some companies adopting strategies specifically designed to support women of color.

Continuing the journey toward pay equity

Through women leaders’ advocacy, mentorship, and promotion of inclusive policies, women leaders are driving the progress needed to close the gender wage gap. But the journey is far from over.

Companies, leaders, and governments must continue to prioritize gender equity by promoting fair pay practices, supporting women’s career advancement, and addressing systemic barriers that hold women back.

Together, we can create a future where professionals are compensated equally for their contributions and leadership positions are accessible to all.

Explore IMD’s “Women in Leadership” program, designed to empower women leaders by helping them discover their authentic leadership style, build influence, and overcome career challenges.

Through immersive coaching, experiential exercises, and a global network, participants gain the tools and strategies needed to drive meaningful change and advance gender equity in their organizations.





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