There have been some encouraging appointments recently in the upper echelons of the world’s biggest companies. The Girlfriends and I have rejoiced at the spate of women securing top executive jobs. If I had daughters, I would be happy that there are role models for them to think about.
Towards the end of last year, for example, the appointment of Liv Garfield to run Severn Trent cheered my heart. And then on the other side of the pond we had the appointment of Mary Barra to run General Motors. Ah yes, Mary Barra. Her pay has just been disclosed, and the Girlfriends are not rejoicing. By some measures, her package is substantially below that paid to her male predecessor.
One of the Girlfriends commented in her email passing this demoralising information on to the rest of us that it made her feel sick, although she acknowledged that she knows “it’s the way the world works”. She added that she had been sent the link to the Barra story by her son’s girlfriend, a stellar achiever graduating top of her class from an Ivy League university this year but facing a grim labour market. The younger woman had also asked my girlfriend for her thoughts on the story. “It’s so depressing,” she told us. “I haven’t the heart to reply …”
It is depressing, and yes, it is the way the world works. No amount of dressing up will change that. The contrast between what men and women are paid for top jobs will cease to be a cause for concern only when we have a bigger bench strength of women in those jobs, and only when women start making more of a fuss about being paid better.
GM’s defence is that Barra is not doing the same job as her predecessor. The company has separated the roles of chairman and chief executive, and also resurrected the post of president, which is a notch below CEO. They have also kept their outgoing chief executive on as a consultant. So they have four people doing the job that was previously done by one. Plus, they say that in April, when they reveal Barra’s long-term pay incentives, talk of pay inequality will cease.
I don’t know Mary Barra and so I have not asked her whether she thinks a basic salary of $1.6m is enough to get by on. I suspect she is perfectly happy with it. Certainly, the technicalities may indeed mean that the inequalities of her pay may not be as stark as they first appear. But the story was a useful catalyst to re-examine why women continue to earn less than men, which overall, the statistics show that they do.
Some of the disparities can be explained by career breaks and part-time jobs, but not all. It is largely because we don’t ask. We are so grateful for our jobs, and we value flexibility sufficiently highly to give it, in our minds, a monetary value. We don’t change jobs as often as men, and therefore don’t negotiate a higher salary every time we move. We are not as self-confident when it comes to assessing our value and negotiating to make sure that it is recognised financially.
I always tell people – men and women – to benchmark themselves against other people doing similar jobs. Ford’s CEO has a base salary of $2m, 25 per cent more than Barra, and it’s easy to check the compensation details of other people in similar positions around the world.
Of all the details in the Barra story, the one that stood out for me was not her pay relative to others, but that her predecessor had negotiated a continuing consulting agreement for more than $4m. That is someone who knows his value and negotiates well. That might be the role model I would want my non-existent daughters to look at.
The world may indeed work, as my Girlfriend noted in her email, in a way that doesn’t favour women, but that is changing inexorably. Watch what happens when all these new female CEOs leave office in a decade or so. I bet they too negotiate better rewards and consulting contracts for their expertise.
Letter in response to this column: