With increased pressure to add more women to corporate boards and executive ranks, one would think that we’ve inched closer towards pay equity at the top. We have not, and in fact, the gap has widened.

Today, women make up 25% of C-Suite roles, an increase from 17% in 2015. And when looking at Fortune 500 companies specifically, a record 53 women currently serve as CEO. While these numbers are a move in the right direction, data from Morningstar shows that at the current rate of progress, corporate leadership will not reach gender parity until 2060, with high-achieving women also waiting years until they see equal pay.

In 2020, women in C-Suite positions, on average, earned just $0.75 for every dollar earned by executive men, according to Morningstar. Not only has this dropped from $0.88 for every dollar in 2018, but it’s also the biggest pay gap since 2012. According to experts, much of this gap can be attributed to the unequal distribution of equity-based pay, which drives up overall C-Suite compensation. In 2020, awards of options, restricted stock, and performance shares accounted for 63% of C-Suiters take-home pay, up from 54% in 2012. When looking specifically at whose share-based pay increased, data shows that women in the C-Suite saw a 20% increase in share-based pay, while men saw a whopping 49% increase.

We spoke with Lorraine Hariton, CEO of Catalyst, a global nonprofit that works to build equitable workplaces for women, to figure out what it’ll truly take to close the gap for executive women today.

Going Beyond Representation

In order to reach true equity Hariton says that adding more women to leadership roles is only half the battle, considering that many companies have unconsciously fallen into a trap of undervaluing skills that are often associated with women.

When looking at the top ranks she says women are disproportionately in roles like Chief Human Resources Officer, Chief Diversity Officer, Chief Marketing Officer, or General Counsel. While these people-centric roles are key to an organization’s growth, she says they often don’t make as much money as male-dominated roles like Chief Revenue Officer or Head of Investment Banking. These roles, she says, “tend to be more risk-oriented with high bonus and stock options because they impact the bottom line of the organization directly.” But, with research showing how firms with women leaders are more profitable, socially responsible, and provide higher quality customer experiences, it’s clear that cornering women into leadership positions that seemingly don’t tie directly to profits is a huge mistake.

“It’s a really important thing to monitor if we're going to get to pay equity,” says Hariton in regards to the bias that’s placed on women and their expertise. “Because some of the skills that are traditionally softer may be considered more feminine or the traditional places where women spend a lot of time may not be valued as highly in the workplace, even though they require more education and skills.” For instance, women leaders are twice as likely as men leaders to spend time on DEI work, according to McKinsey & Company and Lean In. But 40% of women leaders say this work isn’t acknowledged at all in performance reviews. Yet, Hariton says that “prioritizing diversity is key to employee retention, good decision-making, and competitiveness,” all of which impact a company’s bottom line.

“I know in Canada they're relooking at the skills and requirements for each job as they start to level and pay them in the regulated industries in order to address these issues,” she says. “In Germany they're doing a lot of this too. And the reality is that the jobs of women and people of color have traditionally been undervalued even though the skillsets may be equal or greater.”

In 2022, the Conference Board of Canada released a report that examined the economic impact of undervaluing certain skills. It was discovered that social and emotional skills — skills that are often associated with women — were at the top of the list for unrealized value, equating to $8.5 billion in 2020.

Creating a Pathway for Equitable Promotions

To ensure women aren’t cornered into lower paying C-Suite titles, Hariton says organizations need to also provide equitable opportunities for women to be promoted to CEO and other high-paying roles that have greater equity.

To do this, she says companies must have intentional programs that help to eliminate unconscious bias. “One of them is sponsorship programs, which are especially important for women of color who often are not part of the informal networks that drive promotion. Secondly, companies should look at and systematically identify their top talent, look at their promotion rate, and make sure they’re monitoring, tracking, and holding people accountable for their decision-making.”

Additionally, she says companies should identify their high potential women and people of color to make sure that they are tracked in the right direction towards some of the highest-paying roles. Lastly, multiple people should be part of the decision process when it comes to hiring and promoting.

“Broader than just the C-Suite, pay equity is important throughout an organization,” she says. “And when we look at the issue, we have to look not only at equal pay for equal work, but also representation and what we pay for different jobs. So I think organizations need to understand all of the elements of pay equity so that we can drive this problem holistically for all women.”