World Cup, Yes. Equal Pay, No

Equal pay for equal work is already one of the most talked-about issues at major organizations, but the U.S. women's soccer team is giving the topic an extra kick.

Minutes after the American women won the Women's World Cup Sunday, thousands of fans in the stands started chanting "equal pay." It was a nod to the fact that the female players are going to be paid a lot less than what their male counterparts would have made had they won the World Cup. The players themselves brought it up before, during, and after the tournament. Experts say the way the American women are paid highlights not only that women can be underpaid, but also that both men and women can get underpaid if they are promoted from within. “If you get paid less at the beginning, you always get paid less in that job,” says Jane Stevenson, global leader for CEO Succession at Korn Ferry and vice chairman of the firm’s Board & CEO Services practice.

Indeed, the women's team sued its own federation over its pay practices months before the World Cup began. After the US Soccer Federation, the body that oversees the sport, identifies elite US women players, it effectively hires them to play for the national team. That guarantees them an annual salary with a nominal bonus for winning matches, which is in contrast to the top male players, whose arrangements are more like an agreement with an outside contractor. An elite men’s player gets almost nothing guaranteed but gets huge bonuses for making the national team, playing, and winning games.

The system, along with how much revenue each player generates from television, sponsorships, and ticket sales, is why a direct comparison between compensation of the men’s and women’s teams can be complicated. The U.S. women's games have been outearning men's games for the last three years, but the sponsorship deals the men's team attracts are worth far more. “If they are getting a salary, it should undoubtedly be equal. If the players comp is tied to the visibility or revenue generated from TV dollars, that’s a different story,” says Andrew Montag, senior associate in Korn Ferry’s Global Sports practice.

Ben Frost, a Korn Ferry's solution architect and expert on pay, agrees. "Viewing figures for the Womens’ World Cup were bigger than ever before, but still a fraction of last year’s Mens’ World Cup, which means that the pay pot is always going to be smaller," he says. (For its part, the federation has argued the arrangement has been part of a “fair” collective bargaining agreement between itself and the players.)

From critics’ perspective, US Soccer is not paying an internal candidate the same amount for a role that an external candidate would get. “At some point, what they did in the past becomes less relevant. What is relevant is what they are creating today,” Stevenson says. “Compensation is supposed to be incentivizing, and in this situation, it isn’t.”

That type of system also occurs in places far removed from sports. For example, a Wharton School of the University of Pennsylvania study on hiring decisions in the investment banking industry found that external hires earn 18% to 20% more than existing employees promoted to similar positions. Those external hires often perform worse than internal candidates do as well, according to the research.

Stevenson says in some of her own CEO searches, internally promoted CEOs were given raises but still made far less than CEOs brought into similar-sized firms in the same industry. In some cases, it can take years for that internal CEO’s pay to reach what the outsider can make, despite the internal CEO delivering better results than the competitors. “At some point the women soccer players made it and should be compensated for doing so. In the corporate world, at some point a junior player has delivered and should be compensated for it,” Stevenson says.