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Why one tech giant is investing another $3 million to close its pay gap

Salesforce CEO Marc Benioff is candid about his company's pay gap and its efforts to fix it. (Justin Sullivan/Getty Images)

Back in 2015, Salesforce CEO Marc Benioff admitted something many CEOs wouldn't: The company had found a pay gap between the men and women who worked for the cloud computing giant, and it was spending $3 million to fix it. Now after acquisitions and rampant growth at the company brought in 7,000 new employees in the past year, he's doing it again, announcing Tuesday that the company has spent another $3 million to adjust for a pay gap that affects 11 percent of its more than 25,000 employees.

In an interview with The Washington Post, Benioff said he believed the re-opened gap was largely because of the company's acquisitive streak -- it bought 14 companies in its last fiscal year, the largest in its history. When companies acquire others, Benioff said, "you buy their pay practices, and this pay practice -- of, basically, gender discrimination -- is quite dramatic through our industry and other industries," he said.

As a result, he said he plans to make a gender pay gap analysis part of his due diligence in the future. "When we do future acquisitions, I will ask the question, 'have we looked at the pay gap for the company?' " he said. "I've never had to do that before. Honestly, in some ways it's shocking. In other ways, it's kind of like, 'gee, why didn't we think of that?' "

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In addition to studying the gender pay gap, this year's analysis -- which Salesforce announced on Equal Pay Day, the day that marks how far into a new year women must work to earn as much as men did in the year before -- also examined differences in the United States along racial and ethnic lines and included cash bonuses for the first time. The adjustments -- employees were told they were getting a bump as part of the gender pay gap assessment -- were made to employees' pay on April 1 and analyzed factors such as job function, level, years of experience and location, grouping employees into comparable roles.

"There is risk involved -- you’re kind of admitting you’ve make a mistake," Benioff said. "Some CEOs just don’t want to say 'I’m not perfect.' I can tell you I’m not perfect, our company’s not perfect and we’re going to make mistakes. But I will try to be transparent about those mistakes, and then we’ll try to correct them as we go."

Salesforce's move comes as diversity and equal pay practices have come under greater scrutiny, particularly in Silicon Valley. Last year, a shareholder targeted nine tech companies to press them to reveal more about how they paid male and female employees. Tech companies -- most recently Uber -- have released data showing their yawning gaps between the number of men and women in technology and leadership jobs.

Some companies have followed Salesforce's lead. Cisco said it has completed an audit of its U.S. employees' salaries, looking for differences along gender, racial and ethnic lines, and adjusted the pay of 2 percent of its workers as a result. Fran Katsoudas, who leads human resources at the company, said her team spoke with Salesforce when running its own assessment, and decided to share its results partly because of interest from employees. "Some of the war for talent has spilled out in a very positive way, with candidates and employees saying 'this is the kind of company I want to work for,' " Katsoudas said.

Benioff said he was initially resistant to the idea that there could be a pay gap at Salesforce when two executives, Cindy Robbins and Leyla Seka, first approached him about the need to study the issue two years ago. "They said at the end of the lunch, look, you have got a pay problem," he recalls. "I told them 'no, I don’t. ... That cannot be true.' " But he told them to look into it and report back.

Robbins, who now leads human resources for the company, said the first analysis indeed found a gap -- and that the pay adjustments were split, with 50 percent going to women who were paid less than their male peers, and 50 percent to men. This time around, 68 percent of the adjustments went to women, compared with 32 percent to men, Robbins said.

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Benioff, who gave out awards at a company event in Washington on Monday night honoring women such as Billie Jean King, who pushed for equal prize money in tennis championships, has been a vocal CEO when it comes to equality issues, speaking out on topics including equal pay and gay rights. He has fought state-level legislation seen as discriminatory toward LGBT groups, most visibly in Indiana, where he threatened to pull business out of the state when Vice President Mike Pence was then governor.

More recently, Benioff, who raised money for Democrat Hillary Clinton’s 2016 campaign, found himself in meetings at the White House with Pence and President Trump, where they discussed workplace training. (He laughs when asked how that encounter went: "Obviously, Mike Pence and I disagreed on legislation that he signed in Indiana," he said. "But then we negotiated with him and had a successful outcome, which is still on the books in Indiana.")

Benioff said he has talked to members of the president's staff about equal pay issues and told The Post he "strongly believes we should amplify the work of the Equal Employment Opportunity Commission," where an Obama regulation that requires companies to disclose pay data is now under review. "If we don’t fight for equality, then the forces of inequality will take us over," he said.

He also acknowledges that the most recent pay adjustments may not be the last and committed to doing the assessment regularly.

"It may just be that every year we're going to be making an adjustment like this," he said. "We're not a static company."

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