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Resources Newsletter Archive Cracking the Compensation Conundrum (November 2010)

Cracking the Compensation Conundrum (November 2010)

 

Beyond The Billable Hour™

 
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Cracking The Compensation Conundrum

Issue 61

November 16, 2010
 

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I recently moderated a panel during which a woman law firm partner told a story that set the audience buzzing. After several years at her firm, she'd gone to the then managing partner and suggested that it was about time he appoint her to the management committee. He said that he'd in fact been thinking this himself, and she's been a member of senior firm management ever since.

Certainly her example is not one that every woman lawyer could successfully follow. She made a point of saying that she intentionally chose this firm because of the presence of successful women rainmakers as well as women in a variety of leadership roles. Here, she thought, was a place where it was possible for a woman to succeed.

Compensation Inequities

No one can specify exactly those factors that allowed her bold assertion to be received positively, rather than with a more biased backlash to her self-promotion. Nevertheless, the buzz indicated that many of the women in the audience felt emboldened by her story.

Her inspiration seems particularly important in the shadow of the recently released report from the Project for Attorney Retention/Minority Corporate Counsel Association (PAR/MCCA), "New Millennium, Same Glass Ceiling? The Impact of Law Firm Compensation Systems on Women."1  "The Careerist"2 blogger Vivia Chen said that reading the results made her feel like Bill Murray in the movie Groundhog Day. These and related findings from the U.S. Census Bureau,3 the National Association of Women Lawyers,4 After the JD II5 and Temple University and the University of Texas Pan-America6 were not surprising.

As we all know, women lawyers earn less than their male counterparts. This wage gap is present at every level, from associate to partner, with the largest gap between male and female equity partners. Women equity partners earn 22 percent less than their male equals. The situation is even bleaker for women of color: they receive 47 cents for every dollar paid to their white, male counterparts.7  

The percentage of women equity partners seems stuck in cement at roughly 16 percent. Women are underrepresented or completely absent from committees making compensation decisions and the state of affairs is even worse for women of color.

Current compensation systems contain significant subjectivity and lack transparency. In addition, much of the negotiation surrounding salaries is private, creating enormous opportunity for the influence of unconscious gender bias.

Furthermore, women have unequal access to those objective factors that most determine compensation: business generation and hourly work. And finally, significant numbers of women and attorneys of color don't know what they need to do to advance or earn higher compensation in their firms.

None of this is surprising, but two findings have particular significance for me. One is that the gender gap in compensation still exists when all the usual suspects blamed for the gap - hours worked, revenue generated, human capital (rank of school, law school GPA), demographics, practice area and size of firm - are controlled either by sampling procedures or statistical regression analyses. Women don't make less because they work fewer hours or are less productive8 . Myth busted.

The second notable finding is what the PAR/MCCA study described as a "deep vein of anger" expressed by many of the roughly 700 women partners surveyed. Significant numbers reported having been threatened, bullied, intimidated, or simply denied credit for bringing in business that figures so prominently in determining partner compensation. They also reported that they lacked opportunities to participate in pitches and felt excluded from work that they had helped bring into the firm.

The Limitations of Current Remedies

The PAR/MCCA report was the focus of many of my conversations with law firm contacts and clients after its July 2010 release.

The process by which the gender compensation gap is created, as well as the formula for its reduction, seems relatively straightforward. The more women rainmakers among a firm's top 10, the smaller the compensation gap9 . Rainmaking is the path to power in firms. It is the route to positions in firm governance from which decisions about policies, compensation and culture creation emanate. Hence, the dearth of women in firm governance disadvantages all women in the firm.

The report provided a thorough list of suggestions and best practices for firms, noting that the changes in compensation practices advocated are the same as those suggested by top law firm consultants. The story shared by the woman on the panel I moderated is certainly consistent with the report's argument for more women on firm compensation and other leadership committees.

But I think there are other lessons from her story that are essential for women lawyers. I don't disagree that firms must change. In fact, equitable and fair compensation practices are likely to help firms by broadening client ties to the organization rather than attaching them to individual partners poised to take their books of business to the highest bidder10 .  

The Devil Is In The Details

But as firms have implemented recommended policies, what we've learned is that the devil is in the details. Perhaps, like the woman I mentioned earlier, women themselves can do more to move the ball forward. It's important to be very clear: the fact that women lawyers may provide the solution does not mean they are the cause of the problem. Aspirin may cure a headache; headaches are not caused by a lack of aspirin.

To say that policies don't change people is to state the obvious. The Project for Attorney Retention has long emphasized the need for training in unconscious gender bias in order to make evaluations and compensation more equitable. I have always made the same argument. So I was particularly interested in firms that had already extensively trained their lawyers in unintended, implicit gender bias.

A case in point: A woman partner, the only woman on a firm's compensation committee, described the extensive unconscious gender bias training her firm had recently completed. As recommended by the PAR/MCCA report, the firm had benchmarking data indicating a significant gender gap in compensation.

After reading the report, she explained the importance of subjective criteria in making compensation decisions. She insisted that without these, contributions from the firm's women would likely go unrewarded. Full transparency is impossible, she argued, for a variety of reasons related to confidentiality and potential liability. She was certain that gender bias did not influence compensation decisions.

I was surprised that, even after extensive training in implicit bias, she was unaware of the processes that typically affect a "token" woman member of an all white male committee. Research consistently shows that one woman serving on a committee of men can give rise to tokenism dynamics that negatively affect both the woman herself as well as her ability to influence decision making11

The position of "token" is lonely and this isolation easily leads to conformity to the group in order to gain acceptance and inclusion. In an effort to "prove" she is neither biased in favor of other women nor serving as their representative, she can inadvertently become hyper-critical of other women. As a result, she may find herself undermining the very women she'd hoped to champion.

In addition, whatever firm members had learned in their hidden gender bias training, they seemed quite oblivious to the workings of in-group bias. That is, while they were watchful of any tendency to be unfairly critical of women, they seemed blind to their tendency to make decisions in favor of men.

It seemed incomprehensible to this well-intentioned woman partner that there could be a disconnect between the factors the committee says it considers and those factors that actually influence decisions. Other studies examining written evaluations of lawyers have identified consistent differences in the application of criteria to the detriment of women and attorneys of color12.  

It's The Unconscious, Stupid!

All the conscious knowledge in the world about gender bias is irrelevant without external or systematic examination of decisions, since these processes occur on an automatic and unconscious level.

The unfortunately limited effectiveness of gender bias training was driven home by a senior male champion of another firm's diversity initiative. He made a point of noting that one woman partner's substantial book of business was really the result of help she'd received from men at the firm. Could that not also be said about many of the men at the firm? Why should her business development success be any more diminished by assistance from men than that of her male counterparts?

Similarly, at a firm that explicitly encourages partners to delegate work, a woman partner's commitment and competence was questioned, and her compensation reduced, for refusing to hoard work and instead making the institutional investment of leveraging associates. This, too, occurred in a firm with extensive hidden gender bias training. As a psychologist, hearing these stories makes me want to scream from the rooftops, "It's the unconscious, stupid!"

The automatic part of our brains seeks explanations for events that make the world appear consistent and just. Training the conscious minds of people who want to believe in a meritocracy may increase their knowledge, but is unlikely to lead people at the top of the hierarchy to conclude, "Oh, I guess I succeeded due to unfair advantages. It's not that I'm really more competent than others at the firm who have not been as successful as I. In fact, I may even be less competent."

The meritocracy believer thus explains the data in this way: "Women aren't as aggressive or effective at business development as men. They wait to be invited on pitches rather than proactively seeking opportunities. This explains their absence among top rainmakers. Of course they are not equity partners, are not on management or compensation committees and are not paid as much." Everyone making this case can point to an example of a woman rainmaker as an exception to the rule.

What's A Women Lawyer To Do?

So, what is an inequitably compensated woman lawyer who knows her firm is not a meritocracy to do?

Perhaps it's time for that "deep vein of anger" to find a clear focus. Women partners might consider channeling that anger into what Debra Meyerson calls "tempered radicalism."13  

Essentially this means playing the game to get ahead without becoming co-opted by and assimilated into the dominant culture. Anger can constructively fuel the determination to create change.

Untempered, this understandable rage simply creates defensiveness, alienates those in power and accomplishes nothing. Unexpressed, such anger simply leads to feelings of helplessness and resignation. This is apparent in the continuing sky-scraping rate of attrition of women from large firms.

In their excellent book, "Through the Labyrinth,"14  Alice Eagly and Linda Carli identify three essential paths women follow to successfully negotiate their way over the many obstacles to advancement:

  1. developing their assertive agency;
  2. increasing connections and communality with other women; and,
  3. creating important social capital by building networks of relationships with powerful leaders and allies.

"Assertive agency" refers to the radical part of tempered radicalism. Yes, women have to work twice as hard to accomplish half as much. Let's accept that and agree to become strategically assertive activists. That's how the suffragists did it and that's what is required now.

Be Assertive

Perhaps women can have the greatest success challenging their own internalized gender stereotypes, and having done this, can expect to be more effective in confronting them in others. Of course there is risk in self-promotion, negotiating for credit and challenging compensation decisions. Assertively inviting yourself to pitches and claiming credit where credit is due may not win a popularity contest, but these kinds of actions are essential. The risks of failing to do so are painfully obvious.

The stir in the room when the woman panelist described assertively asking to be on the management committee reflects how energizing it can be to think about opportunities rather than threats. Here's an even more thrilling idea: when you're invited to be the token woman on the compensation committee, respond graciously that, given the firm's clear commitment to diversity, you're sure that they wouldn't possibly want to place you in the position of token. Remind them of what you all just learned in hidden bias training. Remember, if you never ask you will never get.

A young woman partner in a women's leadership coaching group I facilitate told a great story that serves as a perfect example of this. She found herself very frustrated upon discovering that a male partner had taken a call from a client she'd brought to the firm. Without a word to her, he'd opened up a new matter and given himself all of the origination credit.

Since he did not have the expertise to do the work, she was sure he would ask for her assistance. But she was afraid to confront him about it.

Other women in the group who'd already taken these kinds of risks encouraged her to try. We reminded her that waiting to be less afraid before acting meant never taking action, and that there were options between the stark extremes of stridency and silence.

She returned triumphantly to the group's next conversation. She'd spoken with him and he apologetically agreed that she was entitled to full credit. She knows things won't always work out so well. But she opened up a world of possibilities for herself.

Empower Your Women's Initiative

Communality reduces the fear and loneliness of the tempered radical. Almost every firm with which I've had contact has some form of women's initiative. It's time for these programs to go beyond bringing in speakers and organizing women's networking events.

It would be far more useful for women's initiatives to organize ongoing women's networking processes. Imagine a firm with its own internal women's Facebook equivalent where members can maintain up-to-the-minute knowledge about one another's practices and client relationships.

This kind of social networking would make it much easier for women to promote and cross-sell to one another. Women entering the firm could learn the ropes far more quickly. Upset about your compensation and seeking data to use for negotiation purposes? Immediate access to your internal colleagues and to their network of intelligence from other firms might be very empowering.

In the course of coaching roughly a dozen women partners within one large firm, I created a distribution list to facilitate their interconnections. When it came time for partners to submit written self-advocacy statements for partner compensation, they were able to help one another write and edit their statements so that their accomplishments were well documented and they struck just the right tone.

Through this same network, these women are able to track their business development activities, the matters they open and the credit they receive. They discuss strategies for addressing credit they don't receive as well. The more they document, and support one another, the more difficult it will be for men to intimidate or bully them out of credit they've earned.

What better group to ask for a written and transparent statement of a firm's policies regarding advancement to partnership, assignment of credit and compensation system than your women's initiative? Why not advocate for a systematic review of assignments, evaluations and compensation decisions? Perhaps your women's initiative might submit a proposal for a diverse committee to address compensation disputes.

Don't expect to hear "yes" the first time you ask. Remember, you're not just negotiating for yourself. You're doing so on behalf of every woman at the firm.

Become Empowered Through Connections With Sponsors

Building a strong network among the women of the firm is essential but not sufficient. You must have good connections with people in power.

Recent research has focused attention on the limits of mentoring in advancing members of minority groups15.  Women need "sponsors" to give them access to opportunities for high-visibility work, introductions to clients and entrée to informal business development networks.

A sponsor functions as a powerful advocate. In the absence of unambiguous and detailed information, decision-makers' conclusions are driven by implicit stereotypes and schemas. Your sponsor can challenge these stereotypes and signal to those making judgments that you "have what it takes."

This suggestion typically meets the greatest resistance when I speak to groups of women partners. The idea of "kissing up" to powerful men is understandably anathema to them. But that is not what I'm recommending. Rather, I am advocating developing authentic, mutually rewarding relationships with influential men.

It helps to keep in mind a powerful psychological principle: the magic 5:1 ratio16.  The most successful relationships, be they personal or professional, are characterized by a ratio of roughly five positive to one negative interaction. Consider it like an emotional bank account.

For each five deposits of good-will-creating acts, the relationship can tolerate one negative emotion-generating exchange and still flourish. No zero-sum games here. And you earn your "right" to protest, complain and promote yourself.

There's no shame in having a champion. Almost every successful minority member has had one17.  

Remember, the devil is in the details. Why not cultivate a sponsor and help close the gap?


Endnotes:

1. Williams, J.D. and Richardson, V.T., "New Millennium, Same Glass Ceiling? The Impact of Law Firm Compensation Systems on Women" (The Project for Attorney Retention and the Minority Corporate Counsel Association, 2010), available at http://www.pardc.org/Publications/SameGlassCeiling.pdf. (go back)

2.
http://thecareerist.typepad.com/thecareerist/2010/09/temple-report-women-partners-.html.  (go back)

3.
http://new.abanet.org/marketresearch/Pages/StatisticalResources.aspx.  (go back)

4. The National Association of Women Lawyers and the NAWL Foundation Report of the Fifth Annual National Survey on Retention and Promotion of Women in Law Firms, 2010. (go back)

5. Nelson, R. L. and Dinovitzer, R., "After the JD II: Second Results From a National Study of Legal Careers" (American Bar Foundation and the NALP Foundation for Law Career Research and Education, 2009). (go back)

6. Angel, M., Whang, E., Banker, R.D. and Lopez, J. (2010), "Statistical Evidence on the Gender Gap in Law Firm Partner Compensation," available at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1674630\. (go back)

7. MCCA's "The Myth of Meritocracy"/Purple Book (2003) available at
http://www.mcca.com/index.cfm?fuseaction=page.viewpage&pageid=614. (go back)

8. See Dinovitzer, R., Reichman, N. and Sterling, J., "The Differential Valuation of Women's Work: A New Look at the Gender Gap in Lawyers' Incomes," Social Forces, 88 (2009); Angel, M. et. al., IBID; Nelson, R. and Donivitzer, R. IBID. (go back)

9. NAWL 2009, IBID. (go back)

10. Williams and Richardson (2010), IBID. (go back)

11. Kanter, R. M., "Men and Women of the Corporation" (Basic Books, 1993). (go back)

12. Tocci, M. J. (2008), "Measuring for a Purpose: What Law Firms Can't Afford to Ignore," paper presented at the Project for Attorney Retention Annual Conference, Washington, D.C. (go back)

13. Meyerson, D.E., "Tempered Radicals: How Everyday Leaders Inspire Change at Work" (Harvard Business School Press, 2003). (go back)

14. Eagly, A.H. and Carli, L.L., "Through the Labyrinth" (Harvard Business School Press, 2007). (go back)

15. Ibarra, H., Carter, N.M. and Silva, C. (2010), "Why Men Still Get More Promotions Than Women," Harvard Business Review, September; Ostrow, E. (2009), "Does Your Firm's Mentoring Program Really Address the Needs of Women Lawyers?" available at:
http://www.lawyerslifecoach.com/newsletter-archive/issue-57-march-2009; Ramaswami, A., Dreher, G., Bretz, R., Wiethoff, C., "The Interactive Effects of Gender and Mentoring on Career Attainment: Making the Case for Female Lawyers," Journal of Career Development, submitted for publication. (go back)

16. See for example, Rath, R. and Clifton, D.O., "How Full Is Your Bucket?" (Gallup Press, 2004). (go back)

17. Thomas, D.E and Gabarro, J.J., "Breaking Through: The Making of Minority Executives in Corporate America" (Harvard Business Press, 1999). (go back)




A version of this article was published in the New York Law Journal November 8, 2010.  Copyright 2010. ALM Media Properties, LLC. All rights reserved. New York Law Journal Online.  Page printed from: http://www.nylj.com.

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