What does worth mean to you? That is the question Amanda Steinberg, poses in her new book, Worth It: Your Life, Your Money, Your Terms. Steinberg is a serial entrepreneur, CEO/Founder of WorthFM, a practical savings and investment platform for women, and founder of the brilliant financial advice website for women, DailyWorth. After finding herself in debt from living the perfect life she thought she wanted based on society's definition of worth, Steinberg hit rock bottom. She clawed her way out of a life that wasn't working for her and into the next phase of her life, one where she decided what worth would mean to her.
The journey to transformation is never easy and seldom a straight line. Steinberg's book gives readers an important tool: the ability to accelerate the journey from financial paranoia to financial fluency in a practical way. Instead of fixing women, the book works with the readers in a language that makes sense for the context in which a woman lives and works.
Transformation, one in which a new paradigm permanently replaces a former paradigm, requires focus on the individual change journey. Prosci's journey of transformation starts with 'awareness' that change is afoot, that the current way of being no longer works within the environment in which it resides. The next stage, personal desire, is achieved when the person decides that she wants to participate in the change. The stage that follows is where the change is actively sought through new knowledge and enablement. Transformation is sustained at the final stage, when the culture, policy, and practices that define the world around the person are set up to validate the new way of being. Only at this stage can transformation be sustained because the world around you is demonstrating that the new paradigm is now mainstream.
State of women and personal financial worth
Noting the L'Oréal marketing message, "I don't mind spending more...because I'm worth it," Steinberg begins her book by analyzing how a woman's worth is tied to the material and financial wealth she consumes, and more importantly, displays to the world. The book leads us through defining self-worth on our own terms and using that definition as a platform to gain control and freedom in financing the rest of our lives.
The first step of transformation is to start from where you are. Worth It's biggest impact is that Steinberg can meet each of her readers from where they are starting their financial transformation because she has been at most of those stages herself. From both a place of empathy and actual experience, by the end of the book, the reader has experienced that needed catalyst and change tools from which she is able to stop working for money and instead make the kind of decisions that enable money to work for her. Money stops becoming a way we parade our perceived worth to the world and instead becomes a funder for the lives we want to lead.
The financial worth of many industries resides in the hands of women. Women make up 80% to 90% of most buying decisions. Analyzing years of data collected from readers of TheDailyWorth, Steinberg found that women were heavily focused on managing money in the short-term, focusing on household finances. While most women were managing or co-managing their long-term investments, they claimed a novice-level understanding or they relied on financial advisors and had little insight or understanding into the decisions being made. That means a woman is either relying on someone else to manage her long-term financial health or it isn't happening at all. That has to change. "Women are different than we were 50 years ago. Our lives are not defined solely upon our place in our family. We have jobs, we are making money. If we can't manifest this kind of power in throughout our lives, we are still reliant on other people," says Steinberg.
Even if women could invest it, they couldn't earn it
There are countless well-meaning programs in place to help women negotiate for more money during the hiring process. There are an equal number of programs aimed at 'empowering' women to self-advocate for promotions and raises. Yet, who can forget Satya Nadella, the newly appointed Microsoft CEO at the time, telling women at the Grace Hopper Conference, the largest event of its kind focused on increasing and enabling women in technology fields, to trust the system when it came to achieving pay equity.
It's easy to blame women for not managing money better. Maybe we women are too distracted with the nitty-gritty of working all day at home or in the office and then working all night, again, at the office or at home. Steinberg rightly points out that women are not the problem. Who or what is at fault? The system.
The challenges in the system status quo do not stop with compensation packages. In addition to discovering that women in large multi-national corporations make 75% of what men get paid, Procurement Leaders, in partnership with Forbes, found considerable disparity in high-paying, high-influence roles continues to exist. The 2017 study found that men fill 90% of senior roles while holding 45% of entry-level jobs.
Nadella is not a bad person nor is he an irresponsible leader. He grew up in a system that has norms. Norms that determine who gets paid what. His awareness of the problem happened immediately after making those unfortunate remarks. Disparity in the worth of compensation packages among the genders is a symptom of an antiquated system that favors one population, white males, over all others. And, with the current pace of change, women's salaries will not be on par with men until at least 2085.
While disparity in compensation worth could easily be construed as a philanthropic topic categorized as a women-only issue, the economic impact tells us otherwise. While women hold significant consumer buying-power, the potential to add significant growth to the global economy can be found in the compensation packages they are awarded. While women will contribute $18 trillion to the global economy by 2018 according to EY, the real impact comes from righting the wrong of pay disparity. If women were paid on par with men in the workforce, a staggering $12 trillion would be added to the global economy today. According to McKinsey, that equals more than the combined GDPs of the UK, France, and Japan.
Role of HR in creating economic equity
While it's easy to blame women for not learning how to negotiate better, the hard part is transforming the system and the unconscious bias of its inhabitants. Yet, that is exactly what needs to happen if women are going to fulfill their ability to equally contribute to the world around them.
Leaders from many companies, particularly in the technology industry, publically shared the analysis of their own pay disparity. While others, including SAP and Intel, have found pay parity in their workforce while others found challenges regarding pay disparity and their corrective actions plans. And even more leaders have committed to increase both the representation and pay equity in their businesses via government-led transformation programs targeting technology businesses. This is a good thing, but only if it leads to results.
Pay equity laws have been in place in the United States since 1963 with many states having their own legislation decades prior. Massachusetts, an early leader in pay equality, passed its first pay equity act in 1945. Last year, bay state governor, Charlie Baker, signed an update to the law making it illegal for HR departments to ask for salary history and forbidding open discussions about earning among colleagues. That law is expected to take effect in 2018. While the new Massachusetts law, and many that have followed in other states, provide more clarity, the challenge is that these laws remain too fuzzy for most HR departments to implement. That is no excuse.
HR departments have analyzed talent pools like marketing executives analyze buyers in the market. They have learned that alignment between personal and corporate culture are critical in the selection to join and stay at a company. The cultural brand has become the golden carrot that attracts and retains the best talent. For women, that is not enough nor has it ever been. Women want a great culture and to be paid fairly.
HR has the opportunity to not only conduct analysis into pay disparity in the workforce; they must also lead the charge in transforming how decision-makers decide on compensation worth. The analysis provides the much needed awareness catalyst for HR to share with executive-level decision-makers who determine cultural values and organizational priorities. Rather than investing heavily in programs designed to 'fix' women into displaying masculine gender traits that often backfire, the real opportunity for HR can be found in creating a new paradigm to eliminate the bias associated with salary decisions made by those in charge, at every level of the business, starting with mid-level managers who hold the most power for the majority of the organization's workforce.
The first step HR should take is simple to design and yet extremely difficult to implement. "HR's most critical role is to change the corporate narrative about money, wealth, and financial health," says Steinberg.