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

Activism and Litigation Reputation blight 0 Year 1 2 3 4 5

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) L2 Strikes and Violence Major Lawsuit (Settle) L3 Customer Boycott Mass Tort Lawsuit (Lose)

Possible Chance

Low Chance

Very Unlikely

Likelihood Trend: Significantly Increasing

Geography

Social: Gender & Diversity Scenario SH-CP-TI

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.

Threat Analysis

Precedent Evidence Base

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.

Further Information

Equal Pay Dispute Scenario Presentation

Corporate Risk Report

Scenario Type: Company Specific: Labour