Why due diligence for mergers should include pay gap analysis

Many of our clients have been identifying and correcting any gender based pay gaps. The Women in Finance Charter, with its 70+ signatories, put pay gaps on the minds of many leaders as they clean shop before having to publish their numbers. However, InclusIQ was interested to hear how proactive organisations are taking pay gaps into account before they acquire or merge with any new partners. In an interview with reporter Jena McGregor of the Washington Post, the cloud computing company Salesforce CEO Marc Benioff explained how in 2015 they had paid over $3M in fixing gender pay gaps to 11% of their employees. These employees were mainly amongst the 14 companies they had acquired during a period of year long expansion.

Acquisition is great for growth, but as Benioff explained when you buy a new company

You buy their pay practices, and gender discrimination is quite dramatic through our industry and other industries. When we do future acquisitions, I will ask the question: ‘have we looked at the pay gap for this company?

No doubt a salient move as fixing the issue is costly. In fact, Salesforce is going to go a step further by also incorporating racial pay gaps and bonuses for the first time. We like Benioff’s pragmatism. He said

There is risk involved – you’re admitting you’ve made a mistake. Some CEO”s just don’t want to say ‘I’m not perfect.’ I can tell you I’m not perfect and we’re going to make mistakes. But I will try to be transparent about those and then we’ll correct them as we go.

‘Learn and pivot’ is a motto we hear a lot in the tech industry. However, it seems Benioff could teach the other tech moguls who are struggling with these same issues a thing about using the industry’s own motto to improve on inequality.