Scenario F - Governance: Equal Pay Movement
Science in Scenarios™ Governance: Equal Pay Dispute Business Risk Overview Gender pay gap is the difference in renumeration of men and women. Large differences between highest and lowest pay grades in a company are also increasingly controversial. Regulation in several countries requires businesses to report on pay grades by gender or level. Pressure for pay equality can cause disruptive disputes and large increases in labour costs. Scenario Narrative Reporting of gender pay gaps and senior management pay inequality results in workforce demands for pay increases. Labour disputes lead to industrial action, protests, strikes, and negative publicity for the company. Consumer boycotts and shareholder activism add to the pressure. Brand reputation of the organization suffers. The company suffers a lengthy period of reduced productivity and is also faced with a class action lawsuit. The pay dispute is settled, leading to an increase in labour costs for the company. Timeline Reputation blight
Activism and Litigation 0
Year
1
2
3
4
How the Scenario Impacts Your Business Corporates will likely experience an increase in labour costs to equalize pay for workers of lower pay and those with grievances. Productivity is hampered as employee morale is reduced. Public relation costs are spent to help mitigate the reputational damage. Money is spent to litigate a class action lawsuit and the share price is impacted as the company is seen as performing worse than their peers on gender pay.
5
Threat Analysis
Metrics of Severity The average % difference between pay rates at equivalent pay grades between men and women in the company being analyzed. Scenario Severity Levels L
Activism
Litigation
Chance
L1
Protests and publicity
Lawsuit (Win)
Possible Chance
Strikes and Violence
Major Lawsuit (Settle)
Low Chance
Customer Boycott
Mass Tort Lawsuit (Lose)
Very Unlikely
L2 L3
Likelihood Trend:
Precedent Evidence Base
Significantly Increasing
Google, Dell, HP, Humana, JP Morgan, Walmart, and others have experienced gender pay related activism and litigation. Google pay issues involved an investigation by the US Department of Labor, a class action lawsuit and a mass walkout over sexual misconduct internal policies. Many large employers of both manual and highly-skilled workers are facing activism and litigation over gender pay.
Geography
Further Information Equal Pay Dispute Scenario Presentation Corporate Risk Report
Social: Gender & Diversity Scenario SH-CP-TI
Cambridge Case Study Series
Scenario Type:
Company Specific: Labour
47
Risk Management for the Consumer Sectors
