Recent social movements have heightened society-wide awareness about negative treatment and pay disparities women are facing in the workplace. Like other industries, commercial real estate is now under greater pressure to address these issues, as companies strive to meet equality, diversity and inclusion goals.
CREW (Commercial Real Estate Women) Network is well placed to track that progress — both through the collection and analysis of data that goes into the benchmark studies the organization produces on a five-year cycle, and drawing from the knowledge and experience of a professional membership in 74 chapters in major urban regions of Canada, the United States and the United Kingdom. This year, the CREW Network Industry Research Committee has produced the whitepaper, Achieving Pay Parity in Commercial Real Estate, which looks at what the numbers reveal, delves into the underlying reasons and offers some strategies for closing the pay gap.
Though the gender pay gap has decreased since the initial release of CREW Network’s initial benchmark study in 2005, it persists and is strongest for respondents earning less than $100,000 and above $250,000. The 2015 CREW Network benchmark study found the median total annual compensation — including bonuses, compensation, and profit sharing — was USD $150,000 for men and USD $115,000 for women, demonstrating a disparity of 23.3 per cent between genders. The size of the gap varies by occupation, with the greatest difference in the study observed among commercial real estate brokers, at 33.8 per cent.
Although compensation is nearly equal for men and women at the entry level, the gap widens mid-career. The benchmark study found that, in addition to the pay gap, there continues to be an aspiration gap. Only 28 per cent of women aspire to the C-suite versus 40 per cent of men.
The majority of women (47 per cent) indicated their aspirations topped out at the senior vice president or partner level, and they consider the lack of a mentor or sponsor within their company as the number one barrier to success. Women in the industry are 54 per cent less likely than men to have a sponsor who can provide career advice or help advance a career path.
According to the Pew Research Center, much of the gender wage gap has been explained by measurable factors such as occupational segregation and work experience. The narrowing of the gap has been attributed to gains women have made in those areas. Other factors, which are more difficult to measure, may still contribute to the gap, including gender discrimination.
Discrimination prorated to education level
A 2017 Pew survey showed four in 10 women in the U.S. have reported experiencing discrimination on the job, with 25 per cent reporting earning less than a man doing the same job — versus only 5 per cent of men reporting earning less than a woman. That number increased with educational level — 20 per cent of women with some college or less reported pay inequity, while 35 per cent of women with postgraduate degrees experienced the same discrimination.
Commercial real estate recruitment and staffing firm RETS Associates’ 2018 Women in CRE Survey found that 65 per cent of respondents were made aware of being paid less than a male counterpart at some point in their career. Of those, 75 per cent noted it happened at least two times. Sixty-one percent felt they were bypassed for a job, assignment or listing at some point in their career based on gender. Of those, 82 per cent said it happened more than once, while 54 per cent said it happened three or more times.
Almost two-thirds of those women did not take action after being bypassed for a job, assignment or listing, citing fear of losing future career opportunities, fear of poor treatment from leadership and fear of reputation damage. Of those who did take action, 45 per cent began to look for a new job; 28 per cent had issues unresolved by human resources or management; 17 per cent resigned; and 3 per cent took legal action. Only 7 per cent had the issue resolved to their satisfaction.
As past CREW Network research has shown, the pay gap widens as women in commercial real estate move up in the ranks, with the gap widening mid-career. PayScale, a software company specializing in pay data, suggests one reason this happens is because women ask for raises less frequently than men, which has a cumulative effect as women progress in their careers.
Despite this inequity starting mid-career, Alison Harrigan, who works in executive search for global organizational consulting firm Korn Ferry, observes that women and men on the executive level take a similar approach to negotiating their salaries. When it comes to recruiting top-level executives for the largest organizations, most candidates seem to have outside guidance on the offer process, such as an employment lawyer or mentor.
According to the 2015 CREW Network benchmark study, men in the commercial real estate C-suite earn 29.8 per cent more than women at the same level. If executive level men and women are negotiating their salaries equally, this may indicate women are starting from lower offers and basing negotiations on salary history rather than their skills, abilities and experience.
Harvard University researchers Hannah Riley Bowles, Linda Babcock and Lei Lai show that, for women, sometimes it does hurt to ask. In a series of experiments, they found that evaluators penalized women more than men for initiating negotiations, and nervousness around male evaluators made females less inclined to negotiate compensation versus encountering a female evaluator.
Calls for transparency
Closing the pay gap could be determined by how employers react to women’s increased and improved negotiations for compensation — and how transparent each employer’s hiring practices are. Sixty-two percent of respondents to a 2016 CREW Network white paper survey believe that pay would be more equitable in commercial real estate if employers were required to share compensation information.
Harrigan reports that many women are open to sharing their compensation information with other women, especially when they’re in similar positions or markets. “Because pay parity is coming to the forefront, I see female executives sharing notes with each other more often,” she said.
A survey conducted by Challenger, Grey & Christmas in 2014 showed that 55 per cent of human resources executives thought companies should practice salary transparency in some form, either full or providing a range of compensation for a given position. But by its 2018 survey, it found that only 3 per cent of companies actually execute transparency practices, while 7% will provide information on a need-to-know basis.
As Harrigan mentioned, more commercial real estate companies are taking notice of the lack of women on their boards and are taking steps to rectify these glaring omissions. In the U.S., real estate investment trusts (REITs) are leading the way. The Wall Street Journal reports that the sector named a record number of women to board positions in 2018, with 49 women filling the spots of 94 REIT directors.
Women comprised 52 per cent of this year’s slate, compared to the 41 per cent of newly elected women in 2017, according to statistics from Ferguson Partners. However, 32 of 192 REITs have no women on their boards, and only eight have female chief executives.
The preceding is an excerpt from the CREW Network whitepaper, Achieving Pay Parity in Commercial Real Estate.