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In small businesses, equal pay is an even bigger challenge for many women

The 2018 Fair Pay Report reveals female SMB employees make 66 cents for every dollar paid to men on average, which is 18 percent less than the broader nationwide gap of women earning 80 cents for every dollar men earn according to the U.S. Department of Labor.

The survey, sponsored by Zenefits, polled 1,000 employees and 400 employers - business owners or HR decision makers - nationwide on issues spanning equal pay, benefits, HR programs and company culture in today’s workplace.

"Self-advocacy and negotiation are two major factors in perpetuating the gender pay gap,” stated Beth Steinberg, Chief People Officer at Zenefits, in an announcement. “By instating a more transparent and mindful pay policy, employers can help remove the issues of unconscious bias, bargaining and conflict that stem from a process reliant on negotiation. Teaching people to negotiate better is a flawed solution to the issue. True compensation fairness will come when employers become more transparent in their pay policies."

Today's workers have more access to wage information through platforms, like Glassdoor, empowering them to ask questions about a company's equal pay policies. Employers need to better define their pay policies and develop their internal people programs.

Ellen Rohr, a small business expert and president of Zoom Drain, an expert drain and sewer franchise business, applies open-book management as one way to close the wage gap.

“When you tell an employee not to say anything after you’ve given that person a raise, you make a liar out of him because someone is going to ask,” says Rohr. “That’s where it goes south.”

Open-book management has to do with actively involving employees in the financial life of the company. Coined by Inc. Magazine’s John Case, here are 3 ways to create more transparency and narrow gender wage gap by adopting principles from open-book management.  

  1. Know your financials.
    Getting to a known financial position is step one. Run your balance sheet and profit & loss statement. You, as the business owner cannot relinquish responsibility for understanding the numbers - it’s your money. It’s important to have a tight handle on your financials, so you can make it a commitment to share that information with your employees. You build trust when you tell the truth.

  2. Share crucial financial information with your team.
    Transparency starts when you’re able to show numbers from the balance sheet or other relevant data with your team. With that, you can start drilling down on each individual’s role within the bigger piece. For example, if the sales team is made up of five people, you divide the forecasted amount by 5, which divides up the sales goal for each person. From there, you can start to think about what the behavioral path is for each person of the org chart.

  3. Offer employees a stake in the successful implementation of their ideas.  
    This is where a training manual comes in. It’s essentially a blueprint of each position’s job responsibilities.
    “Our manuals cover 80 percent of what our team members are going to find in the field,” states Rohr. “We have procedures for creating procedures. If it isn’t written down, you can’t keep your workers accountable. It’s a foundation for any great company.”
    Every individual can use it as a checklist to master the skills associated with their role, ultimately allowing them to level up at the company. Success metrics should always be measurable, so you can have productivity-based bonuses for performance as long as the parameters are clear. It’s more than having a good attitude or multitasking well.
    “If our employee were to demonstrate the select tasks at our plumbing company as stated in the manual, including changing out the flow valve, installing the toilet and water heater, and you’ve practiced it at least three times on the job, that’s where we may consider moving that person to a higher class.”  

If you’re interested in learning how to grow and fulfill the potential of your business, check out our three-week, coach-led HR course by BusinessBlocks. Enroll today.