Vice President Digital Acceleration at Walmart eCommerce
December 8, 2017 By Daniel Torres Dwyer
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LS International speaks with Walmart eCommerce’s VP of Digital Acceleration, Kate Pearson.
We discuss with Kate about how an army background has contributed to her career in business. Being someone who’s managed big teams in traditional Retail but is currently working on projects that are cutting edge, she’s developed a leadership style that’s enabled her to be successful in very diverse set ups, from the Army to Retail, Logistics and Strategy. “Many people think of the military as a command and control leadership style, but the military really encourages leadership development and is very influential on how we think about leadership in Business. I learnt how to motivate and develop future leaders and grow talent”.
During the Podcast we discuss:
A military background and leadership style in the business world
Innovations Kate has developed in Omnichannel
What’s next in the eCommerce journey
Moving from Operations to General Management
I'm Daniel Torres Dwyer welcome to a new edition of our career success podcast. Today, we'll be joined by Kate Pearson, Vice-president Digital Acceleration for Walmart eCommerce. In this role she leads efforts to deliver a new ways to serve the blended customer at scale for Walmart US. She previously held leadership roles another large with that organization after beginning her career as an officer in the U. S. army. Hi Kate thanks for being here with us today.
My pleasure, thanks for inviting me.
So look, Kate, you started your career in the army which is something that we see which is something we see sometimes, especially in the U. S., what leadership style did you learn in the army?
That's a great question Daniel. You know, I think many people when they think about the military, they think about somebody that might lead with a very command and control type leadership style. And I'd say that I learned a great deal of discipline in the military and structure. But one of the things that many folks don't know from the outside is that the military really encourages leadership development and was influential. In fact, at least in the United States, on how we think about leadership in the business environment. So, I learned from an early age how to motivate folks, how to develop future leaders and how to grow talent and so I think that while I do like discipline and order and structure I think part of my leadership style is developing folks in and encouraging them to grow in their careers.
Okay, very interesting, and how has that added value to the rest of your career?
Yes, I think the elements of kind of the discipline aspect had helped with ensuring delivery and high accountability. So that helped with ensuring that you have the goals that have been set in front of me, are able to be accomplished. But the other thing is that I have this really, same mindset of developing talent and over the years have developed an incredible network of leaders that I've had the pleasure of working with and now I get to see do incredible things in other organizations as well. So, it it's just been a wonderful blessing to have this network based on developing talent.
Aha, okay, great. Look let’s switch into the current industry you’re in which is Retail, specifically e-commence. And you're working at Walmart, which is a traditional retailer, has had to make some major changes in order to keep up to speed with the changes happening in the retail sector. In your experience so far what would be the top three innovation that you driven to helping in this transformation from traditional retail to what it’s generally called Omni-channel?
Well Daniel my background is clearly in logistics and operations. So, my first role at Walmart was to build a fulfillment center network and in that we investigated a lot of mechanisms to make a world class fulfillment network and had the opportunity to build from the ground up. One of the really interesting things that I helped lead was putting robotics into some of our fulfillment centers to automate pick modules and other pieces of the, that are traditionally more about a manual or physical delivery system. So, that was a really neat thing that I did right out of the gate.
The next thing that was fascinating in the second role that I had at Walmart was to look at really bending the curve in terms of technology with last mile. So, we had a partnership we kicked off with both the car systems Uber and Lift and created the last mile delivery mechanism and so really thinking about how to take advantage of and help kind of defray costs of the last mile expense into delivery.
And now the current role that I have is customer facing in store technology and so there's a lot of interesting experimentation that were involved in: to look at internet things, looking at kiosks, looking at AR technology and to just changing the paradigm of what the store looks like today.
Okay, very interesting. And, for you personally as a professional what is exciting for you to be in E-commerce?
Absolutely, so I've been in retail for about fifteen years and I’ll tell this: the pace at which we are moving is absolutely staggering. I have always been and had roles where we need to move very quickly and we need to be on our feet in terms of delivering things and putting the future forward into today and I would tell you that it is just incredible, you blink and so much happens, so I think that for me is just the exciting part of what we're doing. So, constant learning, constant change and really just adapting as quickly to what the future holds.
Aha! Okay, very interesting and further to this, actually, a part of the excitement is probably building up new things. In the next five year what do you see are going to be the big changes or transformations? Either both in Walmart or in retail as a whole?
Yes, I would say that we’re at a really fascinating place in retail. There's been a lot of news coverage about the industry and about kind of the depth of retail or the decay of brick and mortar and what I'd share is that for organizations including my own, that are not embracing actively change and really looking at what they can be doing immediately to either maintain pace or leap frog in terms of technology are going to be left behind. So, I think there's going to be kind of a bifurcation where some organizations that can’t adapt quickly in and become not as relevant to the consumer that demanding more and more will begin to decay even faster and I think those that get it and are very active in changing the core of how they function as an organization like Walmart is going through and turn our stores into more than experience center where we delight folks with interesting interactive ways that the store becomes the choice that people want to go to and not have to go to, is what I see in five years. So, really focused on customer experience in the stores and making it a delight hearing something they enjoy going to is where I would see retail in five years.
Okay, Okay. And you mentioned before that you actually started your career in the army and then in logistics.
So you've been from logistics into a more general management type of role. We normally see in the industry people that are Generals Managers coming from other functions project such as marketing, sales, finance or, for example, in retail, from store management. What value do you see in that starting supply chain then become a general manager?
Yeah, what I would say is a couple of things I think there are two elements that at least in my experience have helped me. So, one, as a fairly junior level, because I was responsible for logistics, I had that for a view, if you will, of the end to end system from a physical standpoint. And even though I was a junior in my career I was looking across a business at more of a more of an enterprise level and I think having a systems orientation that creates has been really helpful for me to be able to think about the business in much broader terms than level of the organization I was in and I think that's one. And then I think the second thing is that in logistics, supply chain, those professionals and myself are very, very aware that we are a cost center to the organization. We are not typically delivering top line revenue and so we are very thoughtful about the P&L and how the potential negative impact we can have to profit. And so really having that PNL orientation has helped to really understand the whole business because you understand, one of the lines on the bottom side of the P&L so intimately.
Really interesting Kate. I think that this information will be very interesting to our listeners. Thanks for joining us and thanks to all our listeners and see you in the next edition of our careers podcast.
My pleasure and I appreciate the time today and thank you to all the listeners as well.
“Leaders are the ones who run headfirst into the unknown.They rush toward the danger.They put their own interests aside to protect us or to pull us into the future.Leaders would sooner sacrifice what is theirs to save what is ours.And they would never sacrifice what is ours to save what is theirs.This is what it means to be a leader.It means they choose to go first into danger, headfirst toward the unknown.And when we feel sure they will keep us safe,we will march behind them and work tirelessly to see their visionscome to life and proudly call ourselves their followers“
Do you know what leadership is? What do you perceive when you talk about leadership?
Upper beautiful part from one of Simon Sinek's books is describing what leadership is.
I would even enhance the last sentence and instead of "followers" use "leaders". The main task of every great leader is to develop new leaders, not followers. Great leaders need to establish leader-leader approach that is simply better than leader-follower approach.
Nobody can force you towards leadership.
Leadership is choice. Your choice. Only your choice.
What are the main things every great leader needs to have? I am sharing with you my view of 6 Things Every Great Leader Should Have.
What is harder for you - to talk or to listen?
Do you listen? When was the last time that you listened?
Listening is essential skill for every great leader. Moreover, it is the one of hardest ones to have. In today's world we are used to talking, we are used to giving advice and we are used to expressing ourselves. However, do we really know how to listen? Do we listen or we are listening and preparing our counter response?
What we can differentiate are three main types of listening.
Level 1 is internal listening based on your own agenda. Meaning you listen, but you do not care what other person is saying. You are already preparing your own answer. Level 1 is only about you.
Level 2 is focused listening. We are focusing on the other person. We can hear what the other person is saying. We are listening without our own agenda.
Where are you as a listener? Are you in Level 1 or Level 2? What do you think?
Level 3 is the deepest global listening. The listening that differentiates great leaders from good leaders. It is not listening only about words, it is about change of tone, it is about body language and it is about hearing what kind of words are being used. Level 3 listening is listening without judgments and without evaluation. You are fully there - you are present. You listen - you really listen.
How often have you been in Level 3 listening? This is ultimate goal of every great leader.
In addition, not only listening to others, but also listening to you. When was the last time that you manage to hear your heartbeat? You do not remember, ha?
If you want to ask questions then you need to know how to listen.
Moreover, do not forget LISTEN has the same letters as SILENT.
Empower.“It doesn't make sense to hire smart people and then tell them what to do; we hire smart people so they can tell us what to do.” Steve Jobs
The ultimate goal of every great leader is to delegate authority where information is. Information is on the “first line” and we need to empower our people to develop leaders there. We need leader-leader approach - everywhere.
What are companies usually doing?
Not empowering people and they are establishing endless reporting. Reporting has the goal to bring information from bottom to the top where authority is sitting. Then the decision is done at the top and it is being cascaded down. Instead that “top” has focus on the vision and leads companies towards long-term success, “top” is swimming in information overload. That is example of Leader-follower approach that is short-term oriented approach.
Leader-leader is a long-term oriented approach. Not many companies are cherishing leader-leader as pressure towards results is on a daily basis. Great leaders need to resist temptation and need to balance long-term and short-term orientation. Leader-leader approach is more sustainable and more long-term approach. The main challenge is that it is an approach of delayed gratification. Results are not visible immediately and in today's world of instant gratification, this can be a challenge. That is why great leaders are here - to solve that kind of challenges.
Not empowering people, we are creating followers who are not developing and who are not unleashing their own potential. If we have 1.000 people in the company and just 5 are deciding, do we need then other 995 people? If we have 15 people in the meeting and they all think the same as 1 big boss, then do we need other people? Here comes the HIPPO challenge. Do not be a HIPPO. HIPPO means HIghest Paid Person’s Opinion. In many companies, HIPPO is talking and others are just nodding or saying “Yes, great idea!” That is leader-follower approach. Remember to Listen. Remember to be Silent. Remember to Empower. Then you can avoid being a HIPPO.
“We kill all the caterpillars, then complain there are no butterflies“ - this is the core of no empowerment.
Empower and stipulate diversity in opinion.
Stipulate ownership and stipulate accountability.
This is what great leaders do - they create new great leaders via empowerment.
Help others.“Train people well enough so they can leave. Treat them well enough so they don't want to.” Richard Branson
You, as a great leader, have personal responsibility to develop others. When you go to the library, you can find section called Self-Help, but where is the section for Help Others?
When someone is not doing well in the job, do you know the reason? Do you listen enough to understand? Do you ask powerful questions? Do you even want to understand what is happening?
On the other hand, you just do not care and you look at the numbers? You then wait for feedback, talk to give negative feedback and you try to use the stick-and-carrot approach? Do you use fear leadership to improve the performance of others?
How much of your time do you use to develop your team? Think about it. When you imagine your working day, what is percentage of your time you use for reading and answering endless emails? What is percentage of your time you use for meetings? The most important is, what is percentage of your time that you use to develop your people? Reflect.
What are you doing for your consumers? What are you doing for your colleagues? What are you doing for your community?
Great leaders care. Great leaders empathize. Great leaders help others - help others to unleash their own potential.
Lead by Example.“Be the change you want to see in the world”; Mahatma Gandhi
Gandhi's quote is one of the most beautiful quotes that I have ever read. Ten words are sufficient - you as a great leader, need to be a role model. People are looking at you - do not forget that.
Have a Vision.“You will never reach your destination if you stop and throw stones at every dog that barks”; Winston Churchill
Where do you want to be in 10 years in your business life?
Where do you want to be in 10 years in your private life?
If you know the answers on those questions then you are already on the way towards great leader.
Great leaders know where they are going. You are the creator of your destiny - nobody else. You decide what will happen to you. Do not blame others, do not justify yourself, you and only you are responsible for your life. Do not be a victim.
So have a vision.
Go fast forward 20 years from now. Where are you? Who is around you? Who are YOU? What do you notice?
Now look back to your life. What have you achieved? Are you satisfied? Would you do it differently? What would you do differently?
Live life. Hey, you have only one life!
Do not use it on worthless things and worthless moments.
Enjoy time with your family, enjoy time with your friends, travel, be outside, simply enjoy!
Before I close with 30 second speech of Coca Cola's ex-CEO, I would like that you take a moment, check two pictures below and reflect.
What do you notice? What do you think about it.
Bryan Dyson - former CEO of Coca Cola“Imagine life as a game in which you are juggling some five balls in the air. They are Work, Family, Health, Friends and Spirit and you are keeping all of there in the air.You will soon understand that work is a rubber ball. If you drop it, it will bounce back. However, the other four balls - Family, Health, Friends and Spirit - are made of glass. If you drop one of these; they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for it“6 Things Every Great Leader Should Have
Lead by Example
Have a Vision
Marko Mintas is Erickson Professional Coach, lifelong learner, sales and marketing leader with successful track record and experience in sales, trade marketing and marketing management of multinational blue-chip company in Fast Moving Consumer Goods. Marko is passionate about coaching, people leadership and supporting other people to unleash their own potential. He cherishes entrepreneurial mindset through challenging status quo, searching, finding and creating new ways to establish additional value, achieve exceptional business results and consistently deliver strong top and bottom line results.
Marko is Master of Business Economics at University of Zagreb with having numerous additional educations incl. Harvard Business School and IESE. He has been working in three different countries and is currently living and working in Vienna, Austria.
Guest Article by Craig Binkley, BINKTHINK Strategy Group (Bio below)
It’s impossible to ignore the way that smartphones have become the centerpiece of many consumer’s lives. They are now the hub of much of our daily activity. We engage with our mobile phones through apps more than we even make phone calls. We navigate to avoid traffic as we drive, or we might call up a ride-share service and not even drive at all. So much for what our mothers taught us about getting into cars with strangers! We check in for our flights and hotels, scan our boarding passes, and even go directly to our room using only our phone. We bank, shop, compare products, read reviews, choose to buy, and even pay automatically in many cases with no exchange of cash or card or even a fingerprint.
But what about how we look at our own business models as business leaders? Are we thinking of that same level of seamless integration and behavioral reorientation on our business structures? Studies by many thought leaders suggest that most companies and business leaders are not ready. But modern leaders know that it’s time to fundamentally rethink what the digital revolution and new capabilities mean for the value chain of every business and our routes to market and customers.
We’re not talking here about the black swans and extreme disrupters enabled by new sharing platforms that enabled Uber, Lyft and Airbnb to exist. We are focused more on the type of shifts that impact existing business models and can be driven within the fundamentals of your business. One of the things we do is to help business leaders navigate all the new tools and techniques with the language and systems of business that have been learned over years. We can rely on enduring rules to help understand how to apply new tools.
While there are many factors involved in a full digital transformation, there are four major things that can get companies moving and leading digital success vs. following or being pulled to the inevitable future:
Redefine what digital means in your organization. This transformation is not simply about digital marketing or new technology systems and point solutions from the IT department.
Put the customer at the center of your full business strategy and re-imagine how you can best serve your customer along the full value chain of the business with new capabilities.
Get excited about the possibilities of new data and the insights they can create.
Drive organizational change in how you approach both internal and external collaboration as you develop a broader eco-system of partnerships along your value chain.
Redefine What Digital Means in Your Organization
One of the biggest problems with digital strategies is that people focus on the massive number of mobile devices in the world – 20 billion by 2025, the pervasiveness of digital marketing, and rapid changes in Information Technology enabled by something called the cloud. And the cloud for a lot of people is known simply as a place somewhere out there where all our pictures and lives are stored and that we only think about when we hear about hacks or find out we need to pay for a bigger cloud to hold all our selfies or that new Taylor Swift album. Or we are amazed by Amazon’s augmented reality that now allows us to try out furniture in our own home before we buy it. These are the fancy things that dominate the digital innovation landscape.
I’ve spent a lot of time looking at digital marketing and assessing companies in the AdTech and MarTech space, where marketers are adjusting to the consumer’s demands for Control, Choice, Customization and Communication. But I want to focus here on the bigger picture of business transformation.
We need to define digital transformation more broadly as fundamentally new models and tools that can be applied to the simple relationship between a brand, product or service and its customers. That relationship has always required companies to develop points of Connection with customers, the proper Content for those Connections, and to do that in a way that leads to profitable and efficient Commerce. While the fundamental model remains true, companies need to take a much more holistic view to understand how all the elements of that value chain are or can be disrupted by new digital capabilities.
Put the Customer at the Center of Your Full Business Strategy & Re-Imagine Your Value Chain
Every company needs to put the customer at the center of their thinking. I don’t mean simply talking about being customer-focused or driving up your Net Promoter Score. I’m also not talking about the easy transition of moving to a marketing approach that centers on people and not the media channels they use. Those are hygiene factors that companies should have been using all along.
I’m talking about taking a simple new look at the work that must be done across the full value chain between your brand, product or service – and the points of Connection, Content and Commerce with your customer. Here’s where you think about legacy systems of a manufacturer, a distributor, a broker, an agent, a merchandiser, a retailer, a service company, etc. – and the roles that each one plays. Most industries have a legacy system in place where the roles along the value chain have been established and often have uniquely skilled players that specialize in each step of the chain. This set of relationships must be challenged – companies need to reimagine their business model based on the capabilities of today instead of the capabilities that built the current models.
Instead of working within a legacy route to market, what if Campbell’s soup simply had a direct relationship with the 20% of households that make up 80% of their volume? They could send them the soup they want, when they want it, directly. Instead of engaging in all the retail sales and merchandising activity and increased trade spending that potentially sells soup below the cost of making it, to people who really might not want soup but can’t pass up the appeal of a buy 1, get 1 free deal.
Leesa mattress is a great example of fundamentally re-imagining the existing value chain and route to market for a legacy industry. Travel agents, insurance agents and other intermediaries along the route to the customer have been totally value-shifted by digital technology and re-imagined relationships with customers. All companies should fully reconsider the value-added of each step in their route-to-market process and re-imagine and develop what can be done more efficiently to provide the same or even greater service or value to customers.
Another key consideration in this area is that it’s not an ‘either/or’ proposition. You must renovate your business as you innovate your business. To really put customers at the center, companies must realize that there are different customer journeys, and you must continue to add value to each journey. For Manheim Auto Auctions, they still must renovate the physical auction experience for customers by adding self-serve kiosks and digital tools for the live auction, while they also innovate for a fully-virtual customer, where they look to bring the energy and excitement of the physical auction to the virtual, online auction. Similarly, banks must continue to enhance the physical in-branch experience with technology for those who use branches, even though millennials may never go into a branch their entire lives. This new bimodal innovation is a major change that companies should adapt in their digital re-imagination.
Get Excited About the Possibilities of Big Data
Big Data is Big Scary for a lot of people. If we throw Artificial Intelligence into the data equation it gets even more machine-like and further from the human business experience. Hardly any company says that they’re ready for the data deluge, or that they’re taking advantage of the massive new data that’s being generated. But it’s creating an ability to drive massive efficiency and customer value and we cannot ignore the opportunity it brings to business.
We’re all aware of how Amazon uses data to look at shopping patterns to know us as a shopper and to make recommendations based on our shopping patterns and other people with similar shopping patterns. But there are many other examples of data driving fundamental business efficiencies across the value chain.
Just think about the changes along the route to market that were created with the UPC code decades ago, when retailers and CPG manufacturers could see store-level and SKU-level sales. That created a fundamentally new conversation on sales, inventory management and purchase frequency that impacted the entire value chain. Retailers gained new power through the knowledge in that data, and manufacturers had to start playing by new rules.
Today companies like Manhattan Associates are connecting omni-channel customer experience and shopping with network-wide inventory visibility and enabling the most efficient order-fulfillment. So, when you buy a pair of shoes online and have them shipped to your home, the technology decides whether the most efficient way to get those shoes to you is from a local distribution center or from the inventory at a local store, based on that’s stores inventory levels of your style, size and color. All that efficiency and customer service is enabled by a holistic set of connected data turned from scary into success.
Drive Organization Change on Collaboration
While great businesses have always cultivated collaboration both internally and with their business partnerships, the digital transformation requires an even more open view of collaboration. Traditional models of business strategy and partnership must evolve as companies open themselves up to new models of “organization”. Our teams have helped many C-Suite leaders understand that “marketing is too important to be left to the marketing department”. That’s because we see marketing as covering the full value chain and “selling more stuff to more people more often for more money more efficiently”, not as simply an advertising and promotion function. The same is true for digital – it’s too important to be left to the “digital experts”. Companies must build an even more collaborative and integrated internal business team that can look at the impact of digital transformation on a holistic basis across the value chain and route-to-market. It also includes looking beyond the company walls at the full eco-system of partnerships that are available to serve the customer/consumer better and more efficiently.
So again, it’s important to remember that we can’t be intimidated by all the newness of the Digital Transformation as business leaders, and we can’t be passive. We simply must think aggressively and holistically about our business, re-think our value chain and route to market using a combination of the things we’ve learned over time with a future-leaning embrace of the new capabilities that are becoming available to us due to the digital transformation.
Craig Binkley is a successful global business leader and senior marketing executive who drives transformational marketing and growth strategies for his clients with Speed, Clarity and Impact. He has successfully built upon almost two decades of client-side success running marketing organizations to become a sought-after consulting partner to clients ranging from Fortune 500 CEOs and CMOs to small business entrepreneurs. Craig specializes in developing pragmatic, fact-based, and customer-focused growth strategies that blend his hands-on operating experience with a wealth of knowledge and business patterns garnered across industries to help illuminate new thinking and clear solutions.Craig is currently founder and CEO of Binkthink Strategy Group. The core principles and approaches of Binkthink are the culmination of Craig’s 35 years driving business growth, global brand and marketing excellence, and leadership success across a wide range of industries and geographies. His portfolio of work now includes well-known brands and companies such as MillerCoors, ConAgra Foods, Pepsi, Kimberly-Clark, Microsoft, Dell, Accenture, Expedia, Pfizer, Johnson & Johnson, Novartis, sanofi-aventis, Gannett, Vodafone, Arla Foods, Dow Chemical, Alcoa, Cintas, Nationwide Insurance, Safeco, TPG-owned companies, Citi, GE, Cox Automotive, the National Football League, Tumi, Kate Spade, and many others.Prior to launching Binkthink, Craig spent four years as CEO of Northstar - a global, multi-award-winning, full service market research agency. Northstar is trusted by a wide range of blue-chip global clients to provide insights and solutions for business, marketing and brand challenges, executing work in over sixty countries from offices in New York, Toronto, London and Jakarta.Prior to taking the reins as CEO of Northstar, Craig served as EVP of Strategy for MDC Partners, one of the fastest-growing and most influential marketing and communications networks in the world. MDC’s agency partners leverage creativity, technology, data analytics, insights, and strategic consulting solutions to drive measurable results and return on marketing investment for over 1,700 clients worldwide – continuing to evolve approaches as the digital transformation, AdTech and MarTech disrupt traditional marketing models and customer connections.Craig entered the MDC Partners network in 2005 when it purchased Zyman Group, a successful global strategy consulting firm launched by renowned marketer Sergio Zyman on the back of his best-selling book The End of Marketing As We Know It. Craig was a founding partner and Chief Consulting Officer at Zyman Group, working with a broad range of clients across industries, and leading a team of almost 100 strategy consultants in offices in Atlanta, Chicago, Miami, Mexico City and London.Before entering the professional services arena to help clients grow through better business and marketing strategies, Craig was a successful leader on the client side for seventeen years at The Coca-Cola Company. He was Vice President of Marketing for Coca-Cola Mexico, driving profitable growth and brand portfolio strength for the company’s second-largest division. He also drove growth as Worldwide Director of Marketing for Diet Coke & Coca-Cola light, and the Minute Maid brand of juices and drinks. Craig has extensive international experience through his global work with The Coca-Cola Company, Zyman Group and Northstar, and has great Latin America depth due to his Spanish language skills developed from living in Mexico and working extensively throughout Latin America.Craig graduated from Davidson College in North Carolina and completed postgraduate work at Harvard Business School’s Program for Management Development.
There is no doubt that the gender pay gap exists around the world. At around 15%, it is perhaps lowest in Nordic countries; in the UK it is 18.4%, while it is 21% and 27% respectively in the US and Japan. The World Economic Forum estimates the global average gap to be around 32%.
The gender pay gap refers to the difference that exists in the average pay of men and women per hour worked, regardless of their level or function. It is thus distinct from the legal requirement for companies to pay their male and female employees the same if they perform the same (or largely similar) roles in the organization. The gender pay gap exists despite legal and other efforts to narrow it. Iceland recently raised the bar by shifting the onus from employees to prove that they have been paid less to employers to prove that they are paying workers the same irrespective of gender. Further, this law makes it a criminal offence if employers do not take action in cases of unequal pay. Given that several factors contribute to creating the gender pay gap, it is perhaps too early to gauge how successful this law will be in further narrowing the gap.
Causes of the gender pay gap
Various research studies have sought to identify factors that cause this gap. Based on data from Denmark (a country that has very strong maternity benefits and other gender disparity laws), Princeton University economist Henrik Kleven concludes that the gender gap is effectively a “penalty for bearing children”. During the 1-2 years of maternity leave, female employees fall behind their male counterparts (what happens if there are no salary raises in those 2 years for the men?). Over the span of a 20-year career, this grows to almost 20%. The same study also noted that there was hardly any gap between men with and without kids. There are of course instances where mothers re-enter the workforce and in a matter of a couple of years, are able to erase the gap. But exceptions do not make the rule.
Harvard University economist Claudia Goldin’s US-based study found that gender pay gap is widest for women in their 30s, which correlates well with their prime childbearing age. Marianne Bertrand from the University of Chicago led a study of Business School graduates and reported that while the average starting salary differential between male and female graduates was about 13% (and attributable to differences in prior experience), the gap grew to 60% nine years into their careers.
The time women take off work to raise kids is clearly an important factor but cannot be the only one that contributes to gender pay gap. There are behavioural differences as well that play a role. For example, the Kleven study also found that in Denmark, although both parents were eligible for childcare leave, almost 90% of the leaves were taken by the mothers. This begs the question whether such behaviours are the result of societal norms and expectations or individual decisions. The answer, as is often the case in such matters, is probably “a bit of both”.
Both in the US and Denmark, public opinion tends to support the view that women with young children should not hold full-time jobs. It is also generally accepted that mothers are more committed to providing care and nurture for their children. As a result of such factors (which are not employer related), many women change jobs after motherhood, choosing roles that involve less travel or more predictable work hours.
Evidence that behaviour is a strong determinant of gender pay gap also comes from a study of Uber drivers in Chicago, 30% of whom were women. Allocation of drivers is based on location of the car and the passenger; considerations such as the driver’s gender are extraneous. Even in such a situation, a 7% pay gap was revealed. Deeper analysis revealed that this may be the result of behavioural factors such as the following:
Male drivers tend to target the more lucrative routes (e.g. airport trips), while women drivers preferred local drives and Sunday afternoons (relatively quiet periods)
Women drive slower than males- so over a long period of time, make fewer trips than their male counterparts.
Males have an average tenure of two years; for women, it is a few months- and Uber’s remuneration is linked with tenure
The average male driver drove 50% more trips per week than women drivers did
In the UK, companies with more than 250 employees have till April 6, 2018, to disclose gender pay data. As of mid-January, 527 companies had reported their data- and there was a 10.7% gap favouring men. The difference in mean hourly wages of men and women ranged from 0% (The British Museum) to 64.8% (women’s fashion chain Phase Eight). It was also interesting to note that organizations such as mattress retailer Sweet Dreams, the average hourly wage for women was 46.4% higher than the figure for men. Another such example was Yellow Dot, which runs 12 nurseries in Hampshire. Its team was "predominantly female", with males mainly employed in "the lower skill areas of childcare". This indicates that skill-based pay differences too exist, with women being preferred for certain roles.
What can companies and individual executives do to reduce the gap?
Ms. Helena Peerheentupa, Mattel’s Head of Licensing for Germany, Austria, Switzerland, Benelux and Nordics, offers some sage advice, when she says “… look for people that love to meet expectations you set for yourself rather than people (who set expectations) of you. By default, if you look at something that you really enjoy, you will be better at it and you will be better equipped” (for senior positions in the company where wage levels are higher).
In a talent-starved world, it is criminal to lose women employees with relevant skills. In today’s technology-driven world, both companies and individuals can take steps to reduce the gender gap. Here are some ideas for your consideration:
Sensitize school children about the role of men in raising children so that over a decade or so, mindsets about the role of men in raising children will change.
Encourage moms-to-be to get exposure and training for new roles six months before they go on maternity leave and allow them greater flex-working opportunities when they return. These could include roles as Mentors/Coaches (subject to experience/competence levels)
Do not consider previous compensation levels during the hiring/selection process for women looking to re-enter the workforce.
To keep themselves “in touch” with their professional fields when they are on maternity leave, women executives can explore freelancing opportunities.
Explore the possibility of doing projects that use their expertise but can be done from home or with minimal travel (e.g. how to incorporate Design Thinking into business processes) that are important to the organization.