Common gender pay gap fix may actually be hurting women's earning power

Good morning, Broadsheet readers! Andrew Cuomo faces a criminal charge, Electronic Arts COO Laura Miele talks inclusion, and a common gender pay gap fix may be hurting women. Have a relaxing weekend!

– Mediocre median. The idea of equal pay for equal work is simple enough. The problem is, the intricacies of the gender pay gap are anything but.

Right now, many companies—for reasons sometimes admirable, other times self-serving—are focused on making sure they aren’t perpetuating the gender pay gap among their employees. Yet not all of those employers are taking the effort to account for the complexity of that gap, and, as fascinating new research from S&P Global shows, that can mean their efforts actually end up damaging women’s earning potential.

At the root of this problem, according to author Daniel Sandberg, is companies’ tendency to focus on median pay. Make sure women and men have the same median salary and you’re all set—no pay gap, right? Well, not exactly. That strategy for managing away the gap, which the report dubs “gender-based compensation management,” actually has a secondary effect: it clusters women’s salaries very close to the median number, while men are more likely to have comp that ranges widely—some make less than the median, but plenty of others make far more.

The analysis, which examined the pay of more than 80,000 executives at Russell 3000 firms over a nearly 15-year period, suggests that as companies fixate on ensuring that women aren’t lagging behind on pay, they’re dolling out more relatively small raises to large numbers of female executives, focusing on getting their salaries up to the median. (This creates what Sandberg calls a “glass floor.”) These same employers are not using the same strategy with male employees, allowing the high performers to claim raises that put their comp above the median.

Interestingly, the report also notes that this approach to pay is also correlated with poor governance. In other words, companies where women’s incomes clustered around the median were also more likely to have been sued over comp disputes, allegations of discrimination, inappropriate workplace relationships, etc. Red flag alert!

So, for those in a position to make compensation decisions, the takeaway is clear. Don’t just look at “equal pay” as a box to check. Make sure the outcomes of your pay policies truly place women and men on equal footing—including allowing female superstars to bring home the big bucks when they’ve earned them.

Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee

The Broadsheet, Fortune’s newsletter for and about the world’s most powerful women, is coauthored by Kristen Bellstrom, Emma Hinchliffe, and Claire Zillman. Today’s edition was curated by Claire Zillman.

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