Analytics Systems

Cisco Spent $2M to Close Minor Pay Gaps

Sometimes you have to spend money to spend more money, but it's worth it when it comes to doing the right thing. That was Cisco's theory in investing $2 million to first understand its pay across all employees and then close any unjustified gaps that existed.

The networking giant built an analytics framework to test its compensation structure both in the US and globally as of its fiscal 2016 year and says it found only minor disparities. As a result, it adjusted around 2% of its US employees' salaries, representing less than 0.1% of its US base payroll, and adjusted 1% of its global employee salary base, representing .02% of the global pay roll. (See Equal Pay Day: Time to Get Paychecks in Check.)

Fran Katsoudas, Cisco Systems Inc. (Nasdaq: CSCO)'s senior vice president and chief people officer, says pay parity has always been a priority for the company, but advancements in analytics have recently made it possible to understand the numbers for Cisco's more than 70,000 employees, male and female, hourly and salaried. Cisco did the first audit 18 months ago and now plans to repeat it across the globe every six months. (See A Vast Valley: Tech's Inexcusable Gender Gap.)

Katsoudas says it wasn't an easy process, especially in those countries where Cisco has a smaller footprint. They also had to take into account a number of subjective factors, like the cost of living, years of experience and time on the job, but Katsoudas says it was actually a pretty objective process.

"I would say the subjective piece was at the very end of the process when we went to a manager and said we found this, is there anything to be aware of? That was the only piece," she says. "Even at that point, it didn’t change the outcome of what we did but helped us understand what was going on but continued to act on differences we found."

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The process of setting up the analytics system and running it in every region cost the company $2 million. Katsoudas expects the cost to run the pay parity analysis to decrease every time they do it, but justifies the expense of it -- even though it ultimately led to more expenses in the form of pay increases -- by looking at the bigger picture of the culture Cisco is striving to create and maintain. She also hopes employees will stick around longer, but that wasn't the only goal.

"The most important thing to us is we want to be the type of employer that absolutely has an amazing culture where every employee feels they are at their very best and are paid fairly and see a tremendous opportunity to have many careers at one company," she says. "It’s a part of who we are and who we have been."

Cisco's pay analysis came alongside a number of other internal changes the company made to bolster its culture and focus on inclusion. Part of this was a study on what attributes make up the best teams across the company, as identified by managers. Observing them against control groups led Cisco to outline expectations for its team leaders around fostering the strengths of individuals on the team, being inclusive and being effective, most importantly. (See Cisco's Centoni Shares Guiding Career Themes and Cisco's Kanouff Kick-Starts the Multiplier Effect.)

"Our study has led us to have a clear understanding of the team and leader outcomes we're going after," she says. "We realize that as a company we'll focus on outcomes. We won't tell them how to do things. They all have different approaches but are focused on those outcomes."

The study focused on things like how to bring out the best in each individual, but Katsoudas says they also found that inclusion and diversity happened naturally on the best teams. "We've been talking about the fact that diversity drives innovation but what we could see in the study of teams that the business identified was how natural inclusion was and the fact that on the best teams, every person felt they had a voice at the table," she added. Katsoudas calls this -- understanding teams and what makes them successful -- the "Trojan horse" for achieving diversity and inclusion at any size company.

"I think the teamwork we're doing and investment in teams is the Trojan horse for inclusion," she says. "It's not a program; it doesn’t sit on periphery; it impacts everything else."

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Director, Women in Comms

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