Gap Inc Pay Equity by Gender Project

Pay Equity Analysis to Validate Women and Men Employees Receive Equal Pay for Equal Work

Validate equity compensation analysis
Gap Inc. had performed an internal gender compensation analysis. Based on their findings, Gap Inc. concluded that they had equal pay for equal work. To validate their internal findings, Gap Inc. requested Exponential Talent perform its own gender compensation equity analysis using statistical testing.

Testing the data and analysis globally
Exponential Talent set out to test the "equal pay for equal work" hypothesis - that is, finding out whether there were significant differences in the average pay of women and men within a similar level and job function controlling for tenure, FTE status, and span of control, an "apples to apples" comparison. Exponential Talent tested the hypothesis globally and within each of the major retail geographical areas of Gap Inc. (US, UK, Canada, Japan, and China).

Validation of Gap Inc.’s initial methodology of using averages to perform wage gap analysis, the method used by the US Census Bureau. This consists of averaging female and male salaries in a given job or level, and dividing them to estimate a ratio of difference between female and male salaries (e.g. 99%, 101%, etc.). Gap Inc. had also checked all of its results against medians to ensure that outliers did not affect mean findings. The initial Exponential Talent analysis was performed to validate the approach taken by Gap Inc. In addition to validating the method, Exponential Talent proposed performing systematic significance testing and incorporating control variables.
Significance testing comparing average female and male salary by level. These tests are used to quantify meaningful differences of salaries by gender.
Regression analysis of average salary by gender controlling for all other factors for all levels with 500 employees or more. This test was performed to further examine and estimate any differences of salary by gender when factors like FTE status, tenure, and span of control were held constant for each level.
Regression analysis of average salary by gender, controlling for FTE, region, for all major job codes. Similarly, this test was performed to understand the relationship of salaries by gender within specific job codes.
Analysis by region for each major retail geography (US, UK, Canada, Japan and China): significance testing by level and job code and with controls for tenure and span of control. This test was performed to see if the results of equal pay for equal work held true for each region.
Effect size analysis for any finding with a statistically significant difference in either direction at the p<.05 level. These tests were run to understand if any differences found were meaningful. We found no meaningful effect sizes for any of the analyses..

Validated and award-winning gender equality commitment
The Exponential Talent analysis found that, controlling for relevant factors there is no significant gender wage difference between women and men at Gap Inc. within job codes globally and in any of the major retail geographies providing an “apples to apples” comparison of wages by gender. The hypothesis of “equal pay for equal work” at Gap Inc. was confirmed. This conclusion was found to be true at Gap Inc. globally, as well as for each of its five largest retail regions (US, UK, Canada, Japan, and China).

As a result of Exponential Talent’s confirmation of Gap Inc.’s initial findings, the company was able to communicate its sustained commitment to gender equality globally to its employees.

Also: Read a preview of the Haas Business School 2018 Best Case Award case study, Eliminating the Gender Pay Gap: Gap Inc. Leads the Way