Courtney McColgan
CEO and Founder
Runa HR
Startup Contributor

The Gender Pay Gap in Mexico and How Your Company Can Stop It

By Courtney McColgan | Mon, 03/08/2021 - 09:54

In the 21st century, in an age where knowledge, science and human rights have reached their highest expression, women continue to be treated less fairly than men. Women have fewer career opportunities, face more obstacles to gainful employment, suffer from higher levels of harassment and earn notably less than men.

Mexico is facing this challenge. Less than half of Mexican women of working age participate in the labor market, the fourth-lowest percentage in the world. Almost 60 percent of the women who do work have informal jobs, with low social protection, high insecurity and low pay.

Those working in the formal economy are under-represented and underpaid. Women make up just 35 percent of entry-level positions, 10 percent of executive positions and 8 percent of board seats. They earn on average 18.8 percent less than men and up to 22 percent less at the executive level.

Seven in 10 women think companies in Mexico aren’t doing enough to fix the problem. In a recent Runa study, we spoke with more than 450 women who work for companies in Mexico. Some of those companies are quite well known, including Accenture, Amazon, Ben & Frank, BBVA/Bancomer, Bitso, Citibanamex, Clip, Credijusto, Creditas, Credit Suisse, Didi, Endeavor, Expedia, Facebook, Google, Gympass, HSBC, Instacart, Justo, J.P.Morgan, Kavak, Kueski, Konfio, Kubo Financiero, Linkedin, Mercadolibre, Nestlé  Nubank, Oyo, Pricewaterhouse Coopers, Rappi, Santander, Scotiabank, Selina, Sin Delantal, Stripe, Snap, Telcel, Telefónica, Uber, Walmart, Yalo y Zendesk.

Here are their Top 5 recommendations on what their companies should be doing to close the gender wage gap in Mexico:

1. Annual salary audits.  Only 15.6 percent of women said their companies conduct annual salary audits to check for gender bias. It is no secret that men ask for more salary raises, promotions and career opportunities. Therefore, it should be no surprise that they receive those benefits more often than women.

Awareness is the first step to solving the problem. When you analyze compensation by gender and race, you can see and address pay gaps. You can also be explicit about how your organization determines compensation so that employees don’t have to guess what factors are driving their pay. 

2. Implementing quantitative performance reviews. 49.1 percent of women said their companies have clear, quantitative processes around promotions, salary increases and bonuses. Why is that important? Performance reviews are partly, if not mostly, subjective – focused more on what your boss thinks about your work rather than on the numbers or quality you produce. That opens the door for gender bias.

How do you eliminate gender bias? Include a large sample size, up to five people per review cycle. Complete performance reviews more frequently, quarterly versus once a year. Base reviews on job skills and require quantitative measurement of those skills on a scale of 1 (Inefficient) to 5 (Mastered). Require specific examples to support those quantitative ratings.

Your process needs to be transparent to the entire company. Employees need to be clear about what is involved to rise at the company and managers need to understand that their decisions need to be objective and evidence-based. Introducing transparency to promotion, pay and reward processes can reduce pay inequalities.

3. Adopting gender blind recruiting practices. 59.2 percent of women said their companies use a gender-blind recruitment process. What does that mean and why is it important?

A gender-blind recruitment process has specific targets for what percent of candidates need to be women. It also requires candidate assessments to be based on skills, not opinion. To achieve this, candidates are required to perform tasks they would be expected to perform in the role they are applying for.

It also uses structured interviews, asking exactly the same questions of all candidates in a predetermined order and format. The grading of those questions is also standardized. This format makes response more comparable and reduces the impact of unconscious bias.

4. The adoption of a flexible work policy. Thanks to COVID, 73.3 percent of women said their company has adopted a flex work policy and the majority of those interviewed believe the new changes are here to stay.

Seventy-five percent of house and family duties are taken on by women in Mexico. This makes it nearly impossible to manage a career while having a family. By allowing women to work when they want, from where they want, managing both can be a bit easier.

The real solution is shifting the family burden from women to both men and women. Companies can help support this by giving equal paternity and maternity leave. Only 5 percent of women in our survey said their companies offer fathers equal-term paternity leave of 12 weeks.

5. Base salaries on the position not previous pay. Women on average are paid 18.8 percent less than men in Mexico. If a company, therefore, bases a job on a candidate's previous salary, they will be perpetuating the gender wage gap. On a systemic level, this means that women will always be paid less than men throughout their entire careers.

By basing the position on a salary range linked to skill sets, the salary gap decreases. Employers should not ask applicants their previous salary in the recruitment process. Instead, they should set a salary range for the position based on market comparables. Where the candidate falls in that range should be based on the assessment of their job skills for the position on a 1-5 scale.

Unfortunately, closing the gender wage gap is not at the top of any company’s agenda in Mexico. Why? Gender and diversity are social issues, not business issues. Until we can prove that gender and diversity mean more profits and better performance, we will never make this a top agenda item.

The good news is that the data is coming. A recent McKinsey study found that the economic value added to companies with greater representation of women in management is, on average, 28 percent higher than that of companies without women in their executive committees. Their profit margins and returns on equity are 55 and 47 percent higher, respectively. Similarly, a recent Gartner study found that gender-diverse and inclusive teams outperformed their less inclusive counterparts by 50 percent. In Mexico alone, it is estimated that closing the gender gap would increase Mexico’s GDP by more than 70 percent. How’s that for a business case?

Mexico can and must work to eliminate the gender pay gap. It is good for society and it is good for the economy. Companies can be the leaders of this change. If each company could implement just one of the above initiatives this year, imagine how high women in Mexico would rise.

Photo by:   Courtney McColgan