Katica Roy: Gender Equity Through the Lens of Labor Economics
Katica Roy is the founder and CEO of Denver-based Pipeline Equity, an award-winning technology company that enables organizations to use data to close gender equity gaps.
A sought-after speaker, Roy’s expert analysis and commentary on gender equity have appeared in Forbes and The Huffington Post. In this SheSuite feature, we discuss the economics of gender equity and its connection to the growing skills gap in the U.S., how inequity affects all of us, and why men need to be part of the gender equality conversation.
When did you make the leap from corporate executive to entrepreneur?
A little over a year ago. April 4, 2017—Equal Pay Day— was my first full time day as CEO of Pipeline.
Did you go to investor groups that were interested in backing women-led businesses?
Your first round is typically not at the true VC level, and so you raise capital from either angel groups or individual angels. You also will have institutional funds that fund seed stage startups. We pitched all three. Because we're in Denver and not New York or Silicon Valley, capital sources are different, so we primarily raised money from high net-worth individuals who were also angel investors and fundamentally believed in what we were doing.
What was the driving force behind taking this leap? Starting a company is a huge risk—a huge adventure, but a risk for sure.
A lot of my leap to starting Pipeline had to do with my background of being the daughter of an immigrant and a refugee who fought very hard to be here in this country—they both have remarkable stories in their own right.
Being raised by people whose ethos was that you always do your best and never give up drove me to seek out ways to take the opportunities I had to make the world better for others.
As the youngest of six kids (five girls) I saw a great deal of gender inequity. I watched my sisters and their families struggle because of their lack of economic opportunity. Given my corporate experience, I believed I could create a solution that would solve gender inequity and make gender equity possible in our lifetime.
For me it was that consistent thread of seeing gender inequity as well as some of the life experiences I had—like being the sole breadwinner for my family of four for the last 10 years. My husband is a stay-at-home father.
Has anyone challenged you about focusing on women in general? Do you also focus on women of color, who are paid less than white women?
We do focus on women of color; we focus on race and ethnicity as a subset of gender. That's a really important part of gender equity because we know on average women of color, to your point, are farther behind white women.
Most of the companies we work with have made a public pledge committing to gender equity. That's where we focus, and we hand-counted those companies and there are 3,800 of them.
We have found that there's a difference between making a pledge and living your pledge. That's where we come in. We enable companies to live their pledge. Companies find that it's difficult to operationalize gender equity and they're trying to figure out how to do that. Not only by closing the pay gap—which is important, and also quite frankly, table stakes, but closing the opportunity gap.
When you're out on the speaking circuit talking about issues like fixing gender equity, how do you start? What's your approach?
We focus on the economics of gender equity, so whether or not people believe gender equity is an issue or even care, it's fundamentally a massive economic opportunity and we view gender equity through the lens of labor economics.
Let's talk more about current labor force issues and what in your view leaders should be concerned about.
A CEO is typically looking at the pipeline of talent—how are we hiring people, how are we keeping people there? What jobs do we need to fill? What skills do we need? Those are the sorts of questions they're asking. When you look at gender equity through the economic lens, it really boils down to three factors: educational attainment, labor force participation, and wages. The central issue around gender equity is that women on the whole are fast-becoming the most educated cohort in the United States.
However, if you just look at the U.S. data, women are leaving the workforce and women are slated to continue to leave through 2026—and the reason it's through 2026 is that's when the labor projections end. So in a world where we will have five million jobs in the U.S. (and 40 million globally) that we can't fill in less than two years, it doesn't bode very well for companies looking to grow if they can't find people to fill those jobs and their most educated cohort is actually leaving.
So that's the lens that we approach gender equity through.
Do you think those projections about women turning away from the labor force are being taken seriously?
It depends. CEOs and companies that care about gender equity and have committed to the pledges, believe it. However, not everyone believes it. Sometimes people will see it, see what's coming and sign-on. Others won't and then they will see their competitors become talent magnets and realize they need to make a change.
I've noticed since I've been doing research on gender and pay that some executives feel the need to volunteer that their companies have done a salary analysis and found no pay gaps in the organization. But I always wonder what was measured, what variables were considered and what weight was assigned to those. There's no universal equation to compute this, so it's interesting to me that people want to debate the existence of a gender pay gap.
That speaks to the importance of men in the gender equity conversation. One of the reasons why we talk about gender equity and not "women's rights" is that it's very common that people equate women's rights with gender equity and women are 50 percent of that conversation. Men are the other 50 percent because gender inequity doesn't just impact women. It also impacts men.
Forty-eight percent of working fathers would like to stay home but can't. Men are four times more likely to die from suicide—they account for 79 percent of all suicides in the United States. When you look at how boys are raised and are taught about what it means to be a man—when men are arguing against the existence of the pay gap, it's typically because they look at inclusion as invasion. The fundamental place they're coming from is "what's my place in the world—what does that mean for me if we close the gap?" It’s a shift of their identity.
Our question always is how do we meet people where they are and bring them along? Because not listening to them is just going to make them scream louder. Understanding where they're coming from and why they say things like gender inequity is groundless is helpful. You know, oftentimes gender equity and closing the pay gap is positioned as a zero-sum game, and it's not.
Fundamentally if you look at it, having a gender pay gap is not only unfair, it's not good for our economy. Closing the gender pay gap actually expands the economic pie for everyone. As well, closing the gender pay gap is only one factor in closing the gender equity gap. We need to eliminate the glass ceiling, ensure women have upward mobility in P&L roles so that women make up more than 5% of Fortune 500 CEOs and 11% of the bench for CEO roles. Achieving gender parity is far more than closing the gender pay gap.
What do you see as the most critical challenge faced by business leaders right now and maybe looking a few years ahead?
One of the biggest issues that business leaders are facing is the fourth industrial revolution and the digital economy where business models are changing and technology is advancing at such a rapid pace and it is only going to accelerate. How do you take a stalwart company—particularly the really big corporations, and even companies that have been around for 10 years—and understand where the world is going and make sure your business model is keeping up?
Certainly there's advanced technologies like automation, blockchain and IoT—all of those things that companies need to take into account. But fundamentally from a 30,000-foot view and from a strategic perspective, the challenge is how you keep your company just ahead of the curve and from an agile perspective really able to capitalize on where the world is going and not just where the world is now.
Do you see any industries in particular that seem to be more challenged by this than others?
The challenges vary by industry. For financial services, they’re dealing not only with automation but also a shifting customer base and grappling with relevance given the transfer of investable assets. Tech is usually at the forefront of change, however, they have lagged in their human capital practices, which for a long time didn't catch up with them and now in the era of social media and the democratization of information, it has. It’s getting harder to hide.
Manufacturing is dealing with automation and a shifting workforce as more people are interacting with machines, which requires a different set of skills. For each industry the impact is different, however the core is still centered in understanding where their value is and the increasing value of data.
At the same time we have GDPR and many data privacy issues are being brought to light. If your company’s value is in your data and there's more restriction on privacy around data, how do you begin to reconcile those pieces together?
Where are you seeing companies doing a good job in terms of what they’re doing around inclusion and diversity and where are they missing the mark?
Most companies are at the beginning of the gender equity journey. Where we're seeing forward movement is more companies making public commitments around gender equity or diversity and inclusion. That's a promising trend. Now we actually need to see it come to fruition. The public pledge needs to be the beginning, not the end.
One of the reasons why we are Salesforce partners is because of their stance, and in particular Marc Benioff [CEO], Cindy Robbins [President and Chief People Officer] and Leyla Saka (head of Salesforce’s AppExchange) are stepping forward and taking a stand on gender equity.
Where companies are really struggling is in operationalizing that commitment to achieving gender equity. Let’s just take the pay gap as an example. How do you truly ensure that everyone is paid equitably? It's great to do a study and close the pay gap, but then the very next day you could make a pay decision that opens the gap. Ensuring gender equity across the entire company is a challenge and that's where the credibility and accountability piece of that commitment really comes in.
My observation from talking to women and men is that they're not looking for companies to be perfect. What they're looking for is for companies to be committed and transparent and to say, “we're committed to achieving gender equity. If there's a problem, we will fix it.”
From an employee experience perspective, that needs to be the experience—that when someone negotiates for a job, or when the company is investing in them to be a future leader, they know that they are truly experiencing gender equity and inclusion at that level. That's what actually needs to happen—for employees to really believe that those commitments are true.
What advice would you give to someone stepping into a leadership role for the first time?
I am not someone who gives advice and here's why: I prefer to stand shoulder-to-shoulder with people. Advice-giving always feels like "I know better than you, so I'm going to tell you!" I'm not comfortable with that ethos.
I have been around a few more years than some folks, so what I would tell people are the things I tell myself, which are how I built my career. Believe in yourself no matter what, whether or not other people believe in you. Believe that you have value, particularly in the face of headwinds. The other is do your homework, then jump and trust the ledge will appear.
I built my career in the corporate world and now with Pipeline Equity through anchoring in the belief that I knew enough about what I was working on and then I would jump and I could figure it out. I often became the go-to person for projects that were at-risk that needed to get back on track, or new projects or initiative that needed to be deployed. As a result, I had really interesting experiences and roles because of my willingness to jump in. Those were centered in believing in myself, no matter what.
Walk us through a typical day for you these days.
I get up early—I'm up at 4 a.m. I am refocusing on exercising regularly mostly for the discipline. Then I grab coffee, check in on the news that happened overnight, get some work done. Then I spend time with my children before they leave for school just before 8 a.m. My time with my children in the morning is special so I rarely schedule early morning meetings. We have a consistent structure at Pipeline Equity in terms of weekly operational cadence. I work until the early evening and arrive home between 8 and 9. Then I spend time with my family before they head off to bed.
I know you're about to kick-off 12-weeks on the road and you're doing a lot of speaking on gender equity. Do you get questions about what organizations can do to support the growth and development of women?
I do, however it depends on what we mean by that. For years—and it still exists—there's been a focus on what's called women's leadership development, which is really more about "fixing" women—we need to teach women how to negotiate effectively or address why they don't apply for jobs. We know the research says that that's actually misguided, and we know that the value of gender equity from an economic perspective is the diversity of views. So, we don't want to train women to be more like men —we need women to be women—that's the value of them in the workplace. This whole idea of “we need to fix women”—no, we don't need to fix women. We need to fix the system. Women are not broken.
For instance, we talk about the idea that women only apply for jobs when they meet 100 percent of the criteria; men apply when they meet 60 percent of the criteria. We're only telling women half the story. The person sitting on the other side of the desk interviewing you is using the very same criteria. Because we judge women based on their past performance and we judge men based on their future potential.
So, we need to focus on fixing the system, if we want to focus on developing women and giving them opportunities. Women are ready to take on those opportunities. That’s not the issue. The issue is that they're not getting the opportunities.
What are your thoughts about the legislation recently passed in some states and cities that prohibit employers from asking candidates about salary their history? Do you think this will help to close the gender pay gap?
It's a good step forward and it's important and it should be illegal across the U.S. to demand information about salary history. However, it's not a silver bullet. It will not close the pay gap in and of itself, and here's why: the issue around equal pay and the burden of proving that you were not paid equally still rests on the person who is not being paid equitably, which largely is women and people of color.
So, I have to somehow find out that I am not being paid equitably, then bring that as a claim or raise the issue with my employer, and then at that point my employer has a responsibility to prove that they're paying equally. That's fundamentally different than the law that went into effect on January 1, 2018 in Iceland, which put the burden of proof for equal pay on companies. Employers have to prove that they pay equally and if they don't they face a fine.
Many folks think, okay, if I speak up and say that I should be paid equitably, chances are that I will face repercussions in my career and that’s an even harder barrier to prove. So, while I might have a short-term win, I will likely pay for it in the long-term.
If we actually want to have equal pay in the United States, we have to shift the burden of proof from individual employees to employers.
Another barrier that inhibits people from advocating for themselves or moving forward with a claim is binding arbitration in employment contracts. In May 2018, the Supreme Court decided a case that allows employers to include barring class action complaints—employees can't come together to make claims about inequity. So, there will be fewer claims coming forward because the legal fees are so overwhelming for individuals.
The question then is, have we really come as far as we think we have in gender equity? Or do we just not know because of the rising tide of binding arbitration since 1991? That was really the beginning of the tipping point of the ability of corporations to use binding arbitration in employment agreements and the case law from there has continued to confirm (which is what the Supreme Court case that just concluded) that companies can use binding arbitration.
In fact, binding arbitration was never intended to be used in employment contracts, it was meant for commercial contracts to unclog the courts that were bogged down by commercial disputes.
Pay equity is such a top-of-mind topic and it makes a lot of sense to talk about it as a matter of economics rather than culture. It seems like we don’t focus on that enough.
One of the reasons why Pipeline Equity looks at gender equity as an economic issue is that if you only look at gender equity as a cultural issue, it becomes a nice, optional thing to do rather than something that’s necessary for running the business—the CEO’s main responsibility is maximizing shareholder value.
Here’s the thing: it’s not optional, not when you look at it from an economic perspective. Not only do companies need to tap into that labor pool, there are economic implications of leaving women out. Women are the primary or sole breadwinners in 40 percent of U.S. households with children under the age of 18. When we leave women out, we also leave out the next generation.
There are so many other implications—we could close the Social Security savings gap by a third if we closed the gender pay gap. Women over the age of 65 are more than twice as likely to live in poverty as men, and on and on. We’re paying for all of that regardless. All of us.
Lorrie Lykins is the Vice President of Research and Managing Editor at i4cp. She leads i4cp’s examination of gender pay equity.