by Meghan Hall, The Registry SF
“Pay parity cannot be achieved without consistent, continuing efforts from company leadership, human resources and women themselves.”
The visibility of social justice initiatives such as the “Me Too” movement that emerged at the end of 2017 have increased pressure on companies to take action against inequality in the workplace, including addressing the pay gap. According to the Commercial Real Estate Women Network (CREW), a professional association for women in commercial real estate, the industry still has a way to go before it can achieve pay parity.
“Pay Parity cannot be achieved without consistent, continuing efforts from company leadership, human resources and women themselves,” stated CREW in its 2018 whitepaper titled, Achieing Pay Parity in Commercial Real Estate. “To close the pay gap in commercial real estate, the entire industry must continue to understand these issues and aim high….”
Building a Case for Equal Pay in Commercial Real Estate
The report compiled data from numerous sources, including previous research conducted by CREW such as its 2015 Benchmark Study Report, a survey of about 1,200 women in the industry. The benchmark study provided the basis for CREW’s most current analysis, and measured women’s progress in the industry over the course of ten years between 2005 and 2015. Data from other organizations, such as Real Estate Talent Solutions’ (RETS Associates) 2018 Women in CRE Survey and PayScale’s State of the Gender Pay Gap in 2018 report.
In the report, CREW found that in the United States, there exists a 23.3 percent disparity between genders when it comes to total median annual compensation. On an annual basis, the median income for women as of CREW’s 2015 benchmark study was $115,000, while their male counterparts made about $150,000. The wage gap was most profound for those working in brokerage, with a 33.8 percent gap between median annual pay between men and women, although CREW acknowledges that several factors beyond bias, including the compensation model from which brokers make their income, could impact the wage gap.
Additionally, CREW cited RETS Associates’ 2018 Women in CRE Survey , which found that 65 percent of respondents were aware of earning less than their male counterparts at some point in their career, and of those, 75 percent stated that it happened at lease twice. 61 percent of RETS’ survey participants also felt they they were bypassed for a job, assignment or listing over the course of their career because of their gender. 82 percent of those respondents said that those circumstances arose more than once, while 54 percent stated it happened three or more times. Despite how frequently women reported gender bias, RETS Associates points out that close to two-thirds of women did not take action for fear of damaging future career prospects or their reputation.
CREW sites several reasons for the existence of the pay gap, among them various forms of unconscious bias and women’s propensity to take time off in order to tend to family matters. In its report, CREW sites CEL Associates‘ annual National Real Estate Compensation & Benefits Survey, which found that 20 percent of women believe their career was adversely impacted by their family or marital status, compared with eight percent of men. CREW also found that the pay gap widens mid-career simply because women do not negotiate as much when it comes to promotions. In some instances, asking for a raise was detrimental; Harvard University researchers Hannah Riley Bowles, Linda Babcock and Lei Lai found evaluators penalized women more than men for initiating negotiations for pay.
“Closing the pay gap could be determined by how employers react to women’s increased and improved negotiations for compensation – and how transparent each employer’s hiring practices are,” said CREW.
CREW is quick to point out that there are important business benefits to pursuing pay parity, and that business incentives can help prompt those within the commercial real estate industry to become more diverse and inclusive.
“With a mixture of men and women at the helm, companies are better prepared for all eventualities,” said CREW. “In the face of the potential for economic and political upheaval, it becomes clear that companies must be equipped with the best available thinkers and strategists.”
According to the white paper, companies with gender-diverse upper management outperform homogeneous companies in return on investment, and they carry less debt. When women account for the majority of management, said CREW, businesses report higher levels of sales growth and higher levels of sales growth and high cash flows returns. Average sales growth was 8 percent per year since 2009 versus a slowdown in growth in less diverse companies, reported CREW. The average debt load for 50 percent club companies – organizations where women account for half or more of senior management – was 28 percent less than diverse companies.
However, women are slowly making gains in the commercial real estate industry. The white paper outlined that the percentage of women in asset, property and facilities management has increased from 35 to nearly 48 percent between 2000 and 2015. The percentage of women in brokerage, sales and leasing also increased from 18 to 30 percent over the same span of time.
However, when it comes to hiring women in leadership, real estate investment trusts (REITs) are leading the way: in 2018, The Wall Street Journal reported that REITs named a record number of women to board positions, with 49 women filling the spots of 94 REIT directors.
Other major companies, such as Wells Fargo, Adobe, Salesforce and Starbucks are making efforts to achieve pay parity and are examples for those in the commercial real estate industry, said CREW. All four companies regularly conduct compensation analyses, which are published annually. Other initiatives, such as gender-neutral language in job descriptions and policies and using an offer standards calculator have proven useful, said CREW. As a result, Starbucks announced 100 pay equity in March 2018, while Adobe has closed the pay gap for 80 percent of its workforce. In February 2018, Wells Fargo disclosed that women working for the company in the United States make more than 99 cents on the dollar to their male counterparts.
“Most companies that have achieved or are close to achieving pay parity agree: It’s not a one-off event and must be evaluated annually and reviewed on an ongoing basis,” explained CREW.
CREW recommends a variety of actions in order to achieve pay parity. Among them, CREW added that top leaders should state their commitment to pay parity goals, and that partnering with a pay equity consultant can provide increased objectivity. Emphasis of performance-based paths to promote and gender-neutral benefits packages that include paid parental and care-giving leave are also critical.
The pace of growth toward pay equity is slow but steady, said CREW. However, at the current rate, pay parity in the industry will not be reached for another 41 years.
“Understanding and committing to best practices today will help us progress to parity,” said CREW. “The time is now.”
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