Bridging the gap: Applying analytics to address gender pay inequity

Abstract

Employers are under increasing pressure from regulators, investors, and their own employees to address gender pay inequity in their compensation structure. However, managers tasked with measuring and closing gender and other pay gaps have few helpful quantitative tools at their disposal. We design and implement an algorithm that measures whether an employer has a pay gap and suggests salary adjustments to close it, all while supporting the employer's goals with respect to equity, culture, and incentives in its pay structure. We present our approach through a case study of one of the first firms we worked with. We also discuss the application of the approach at other organizations ranging from 75 to 130,000 employees. Our work not only provides management personnel with an accessible solution to a problem of growing social and practical importance but also demonstrates how the operations management toolkit may be applied to improve human resources management and address an important social problem.