FBR: The Gender Pay Gap Is Real + Call for Entries for Franchising@WORK Awards

Our recent study found that franchise salaries for women are lower than for men, especially at the mid-level management and C-suite levels. The question is why?

In March 2019, Franchise Business Review released our Franchising@WORK Employee Engagement & Compensation Report. This groundbreaking research looked at survey results from more than 1,350 corporate franchise employees representing more than 250 franchise brands.

We invited all corporate franchise employees to participate in a survey that asked 24 core benchmark questions related to job satisfaction, engagement, management, brand leadership, and culture, as well as detailed personal questions about their position, compensation, benefits, and demographics.

We specifically asked about franchise salaries as there is not any recent third-party data available to help brands benchmark compensation.

The Pew Research Center in 2018 found that, in general, women earned 85% of what men earned. Perhaps unsurprisingly then, the Franchising@WORK study shows women's franchise salaries to be lower than those of their male counterparts, with similar experience at nearly every level of the franchise organization.

The results revealed that women in franchising earn significantly less at most levels:

• The pay gap is widest within mid-level management, where male managers earn a full 34% more on average than female managers.
• The gap shrinks to 8% at the director level, and all but disappears at the VP level (just 1% lower for women, which is within the margin of error of the survey).
• Discrepancies widen again in the C-suite, with female C-level executives reporting salaries 15% lower on average compared with salaries for men.
• Additionally, women are under-represented in senior leadership franchise roles, with women representing only 27% of the C-suite in franchising, and 33% in VP/SVP roles.

What the data did not reveal, however, was why the gap exists. As our team reviewed the data, we talked about our own theories and questions:

• Is it because women tend to take more time off to provide care for their families? It seems plausible that women are more likely to leave the workforce for extended periods to provide unpaid care for children and elders, therefore missing out on years of experience that could contribute to raises and/or having to "re-enter" the workforce with a gap on their resume. Interestingly, the American Association of University Women, which studies the gender pay gap, says that mothers, including those who never left the workforce, get paid less than other women, and men who have children do not experience any loss in earnings when they become fathers.
• Is it because women tend to not negotiate salary or ask for raises? It's possible that many women are not as assertive as men when it comes to asking for more money. Women are generally thought of as more empathetic and tuned in to emotions -- traits that are encouraged as they grow up, but that conflict with putting their wants and needs first when it comes to business. It's also possible that women who are assertive at negotiating are not viewed favorably, and may be passed over. Past research on the subject has shown that women who attempt to negotiate too aggressively are seen as "demanding," which hurts their chances of being hired, and therefore women are less likely to ask for what they want.
• Is it because women value other aspects of a job -- flexibility, culture, etc. -- over money? It could be that women place more value on some of the "softer" benefits offered by an employer, such as the flexibility to adjust their schedules based on childcare or other family needs -- being able to meet children at the bus, attending school or extracurricular events, or not having to travel for work.

Of course, these are all just theories we came up with here. Our hope is to start a bigger discussion with more teams. You can download the full results of the Franchising@WORK study here. I encourage you to talk with your team and look at your own corporate structure. Are you seeing similar trends? Can you identify the factors that contribute to employees' satisfaction with compensation and engagement in your organization? I would love to hear your thoughts. Email me for more information at [email protected].

Call for Entries Now Open!

The 2020 Franchising@WORK Awards recognize the best franchise companies to work for based on Franchise Business Review's annual employee engagement and compensation benchmarking survey.

The survey is open to all U.S. and Canadian-based franchises, multi-unit franchisees, and suppliers serving the franchise sector that have at least 10 full-time employees and gross annual revenues of more than $1 million.

The deadline to register for the survey is March 31, 2020. Learn more and enter your company now.

 Michelle Rowan is President & COO of Franchise Business Review. Contact her at [email protected] or 603-433-2260.