The U.S. Soccer Federation sparked national outrage last year when it was revealed that the men's national team (MNT) was earning significantly more than the women's national team (WNT), despite the WNT’s four World Cup titles, four Olympic gold medals and international regard. As a result, the WNT sued the U.S. Soccer Federation in 2019 for pay discrimination, and although it appeared undeniable, the suit was recently thrown out by a federal judge. The decision came down to the two different pay structures the teams had independently negotiated and agreed to. The WNT negotiated a fixed pay structure that included guaranteed pay and smaller bonuses for wins, while the MNT chose a variable pay structure that did not guarantee salary during injury or severance but offered higher bonus provisions. The WNT chose the safer choice, which assured pay but cost them the bonus earnings that could have come as a result of their championship record.
Why would the WNT, given all of its success and accolades, have opted for this pay structure? While there are plenty of nuances within the financial structures of the soccer leagues, one main factor stands out: risk. Across the board, research has shown that women are more risk averse: a Harvard study found that women were 17% more likely to choose a safer financial option than men. This risk aversion would naturally extend into compensation. In one laboratory experiment, participants were asked to solve a task under two payment schemes: a piece rate (paid per completed task) or a tournament (paid if they beat others). Women were half as likely as men to choose the competitive incentive scheme, and if you compared actual earnings to the choice that would have maximized payouts, low-ability men entered the tournament too much, and high-ability women didn’t enter it enough.
Outside of laboratories and soccer leagues, people don’t get to choose their incentive structures; they instead choose their jobs. This may be why women are underrepresented in all levels of sales roles, a career known for higher variable pay. Women represent only 23% of sales representatives and 15% of frontline managers, according to a 2020 Gartner report. Despite the lack of representation, Xactly has shown that women achieve higher performance. Even more interestingly, our recent ZS study found that high-performing women also sell differently. They are more likely to emphasize connecting, shaping solutions and collaborating, while high-performing men rely more on improving and driving outcomes to sell. The selling skills that women tend to favor are more crucial in today’s sales environment, and increasing representation of women on your sales teams is an excellent way to make sure these competencies are represented and valued by all salespeople.
During our work in sales compensation, we often hear the phrase “eat what you kill,” but this mindset may be driving the gender gap in sales. The obvious way to address this would be to reexamine the fixed to variable pay of your sales roles. Anecdotally, we see industries with a high variable pay such as technology and financial services have fewer women salespeople, while there are more women sellers in higher fixed-pay industries such as pharma. Within roles this is also true: relationship management and key accounts roles usually have a higher fixed weighting and more women. However, often the pay mix is market driven and changing it may be highly disruptive. Here are some things companies can do outside of just lowering variable pay:
- Sponsor women into sales roles to make them feel more confident that they can earn. One study found that formalized workplace sponsorship programs, such as programs to recruit women for sales roles internally, or sales rep training programs that they are hired into, but that ease them into variable pay once they meet certain requirements, increased women’s willingness to compete.
- Tie compensation to growth. One study found that though women are less willing than men to compete against others, they are equally willing to compete against their own past achievements, with similar boosts to performance. Setting individual growth goals might be challenging, but could also tie to strategic objectives.
- Provide frequent performance updates. Another study of competitive tennis found women were confident in their performance for a shorter period of time following a win compared to men and could benefit from more frequent reassurance. This should be accompanied with coaching.
Of course, making some of these shifts towards personal growth or fixed pay could have an impact on men’s motivations. It’s always important to consider various motivational profiles when designing incentives. Perhaps you could augment with some contests or leaderboards that would satisfy more innately competitive salespeople.
As you can see from just the suggestions above, the changes needed to attract and retain a more balanced sales team will have to go beyond just compensation. However, as companies are remaking their distribution organizations and rethinking how they go to market in the new normal, adding fresh talent to sales teams could be a competitive advantage, and compensation is such a powerful lever that it’s a great place to start.
