Photo: iStock / Dilok Klaisataporn
Target Receives the First Perfect A+ on ‘Racial and Gender Pay Scorecard’
Target is at the top of its class when providing quantitative disclosures on employee pay equity, according to the sixth annual “Racial and Gender Pay Scorecard” from Arjuna Capital and Proxy Impact.
The retailer earned the only “A+” in the study of 68 major U.S. corporations. Starbucks, Lowe’s, Best Buy and Home Depot received “A” grades.
Target received its perfect score “due to disclosure of 100 percent equal unadjusted and adjusted racial and gender pay gaps and full disclosure of its methodology,” according to the report. It’s the first time in the study’s six years that a corporation has earned the “A+” distinction.
“Target’s score of A+ is really something to celebrate this Equal Pay Day,” said Natasha Lamb, managing partner of Arjuna Capital, in a statement. “Racial and gender pay gaps are structural and persistent, but the Scorecard holds up those companies that are doing the real and honest work to create pay equity.”
Twenty-five companies received an “F” for failing to disclose pay data. Arjuna Capital and Proxy Impact grade on quantitative disclosures and not quantitative assurances. Retailers on that list included Walmart, TJX Companies, Costco and Kroger.
Only 18 of the 68 corporations in the study currently disclose or have committed to disclosing pay gaps in the next year. The research found that 38 percent of the consumer companies on its list report median pay gaps.
“Women and people of color are almost always deeply underrepresented in higher paying positions. Median pay gap data sheds a light on that problem, and studies show that companies that disclose pay gaps are more likely to fix them,” said Michael Passoff, Proxy Impact CEO.
Fixing the racial and gender pay gap is an economic imperative, according to the report’s authors, who cite a McKinsey study and another from PwC as evidence for their case.
“McKinsey projects closing the racial wealth gap could increase GDP by 4-6 percent by 2028, netting the U.S. economy $1 to $1.5 trillion. And PwC’s ‘2022 Women in Work Index’ estimates the gender pay gap could boost the economies of the Organization for Economic Cooperation and Development (OECD) countries by $2 trillion annually — an opportunity we should embrace.”
Discussion Questions
DISCUSSION QUESTIONS: Do you agree that companies that disclose racial and gender pay gaps are most likely to fix them? What impact will fixing pay gaps have on retailers?
Poll
Loading …BrainTrust
Neil Saunders
Managing Director, GlobalData
Paula Rosenblum
Co-founder, RSR Research
Yet more evidence of Target making smart decisions. Congratulations to Target and all the companies who graded A (or better). The evidence is clear: when we are all treated equally individually, we all do better collectively.
Target is a good company and it shows in many things it does. Of course, if your pay (male vs. women) is disclosed you’ll want to fix it, but full respect to those who just do the right thing.
I do not believe companies should be obliged to reveal any pay data. However, doing so shows that they, at least, recognize the issues of pay imbalances and inequalities. That said, I don’t think not revealing data has a detrimental impact on performance in and of itself, and I don’t think consumers will take any notice of this kind of study whatsoever. All the listed companies that received F scores for non-disclosure – Walmart, Costco, TJX, and Kroger – actually perform really well. All that said, companies should want to treat people equally because it is the right thing to do. It’s as simple as that.
Wow. I don’t frequent Target but actually feel inclined to do so after seeing this report. What disappoints me is the apparent failure of my beloved Costco. What I wonder about however is whether or not there is a justifiable reason for not reporting. For example, governance, privacy or legal issues. I’m sure there are BrainTrust colleagues who can provide insight here. The “F” is for failing to comply with a request not for any pay gap problem so jumping to a conclusion and judgement isn’t wise.
Congrats to Target, another example of their commitment to doing the right thing for their team members. I don’t think that companies who haven’t complied with a request deserve an “F”, I think it should be mentioned that they haven’t reported. Historians and archeologists will tell you “the absence of evidence is not evidence.”
Quarterbacks make the most money in the NFL and that remains true regardless of the fact that salaries are public. In other words, making them public does not force the gap between quarterbacks and other positions to close or between quarterbacks on different teams to close. It’s pay for performance so I agree with my colleagues that companies should do the right thing and pay their best employees accordingly because it’s the right thing to do. It’s difficult to say what effect fixing pay gaps will have on retailers other than increasing salary costs. However if Target is an A+ and Costco is an F, (which I hope they’re not), then I suspect that the employees of companies with F ratings will run to companies with higher ratings, like Target. Congratulations to Target for fixing all unfair pay gaps, not just disclosing them.
People should be treated equally and paid fairly for their work. Period. It’s too bad that in 2023 there even needs to be a scorecard for something like this. Having worked at Target, it doesn’t surprise me that they are leading the pack and doing well on this front, but that doesn’t mean that they shouldn’t look to continuously improve on such initiatives. For other retailers, I do believe that it is easier to fix problems if you are measuring them and are able to compare yourself vs. your competitors in a transparent manner. It’s also likely that you will probably lose some share to Target and other companies until you match them on such scorecards. Consumers are very informed today and a lot of them don’t want to spend money with companies whose values they don’t support.
First, congratulations to Target. Once again, they set a standard for how to hire and keep employees. If a company doesn’t disclose data, that shouldn’t be a reason to give them an F. It’s their option. This isn’t school where if you don’t show up you get the F. As for pay gaps, I like the way some companies are doing their best to equalize and balance the way they hire, promote and compensate employees. We are living in an era of extreme awareness. We not only are talking about the pay gap problem, we are doing something about it.
I agree with the comments of my BrainTrust colleagues. Bravo to Target! Bravo for rising to the study’s top and bravo to the philosophy of transparency.
My quick conclusion, correct or not, is that those who do not disclose the information have issues that they don’t want to be highlighted.
How valuable is this progressive thinking? Let’s read the last paragraph of the discussion one more time:
“McKinsey projects closing the racial wealth gap could increase GDP by 4-6 percent by 2028, netting the U.S. economy $1 to $1.5 trillion. And PwC’s ‘2022 Women in Work Index’ estimates the gender pay gap could boost the economies of the Organization for Economic Cooperation and Development (OECD) countries by $2 trillion annually — an opportunity we should embrace.”
Transparency doesn’t always trigger change, but measurement does. Transparency is focused on public perception improvement, even if the company does nothing about it- a form of accountability. As for pay gaps, the benefits are found in who you’re able to hire and how well they can perform. Target’s move toward equity can be industry leading and results are self evident.
First of all, it’s a tragedy that this is “news.” It’s 2023. There shouldn’t be ANY gender or racial pay gaps to fix. But, clearly there are so to answer the question, yes, companies that disclose racial and gender pay gaps are most likely to fix them. Why? Because they (a) understand they might have a problem, (b) conform they have a problem,(c) acknowledge that a problem exists, (d) find examples of the problem and correct them – all of them. Put more simply, awareness is a prerequisite, but not a guarantor, of action. In the short run, fixing pay gaps will increase labor costs, in some cases significantly increase them. But, in the long term, it is an important first step to attracting, building and retaining a higher quality workforce. As for those companies whose policies we are celebrating I have one simple question, “What took you so long?”
I’ve little doubt that the more likely a company is to have “good” numbers, the more likely they are to report them. As far as “fixing” them: once we’re all on the same page as to how these should be measured, we can talk about that.
(And curiously omitted, I won’t speculate as to why, is any mention of what advantage – or even disadvantage ?? – these scores might have…outside of the inherent value of good polices, of course)
First, congratulations to Target. Once again, they set a standard for how to hire and keep employees. If a company doesn’t disclose data, that shouldn’t be a reason to give them an F. It’s their option. This isn’t school where if you don’t show up you get the F. As for pay gaps, I like the way some companies are doing their best to equalize and balance the way they hire, promote and compensate employees. We are in an era of extreme awareness. We not only are talking about the pay gap problem, we are doing something about it.