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The Beauty Industry’s Wage Gap Problem

Although more women than ever before occupy middle and upper management positions in the beauty industry, the road to the very top remains dauntingly steep.

As a rising young executive in the personal-care business, Carol Hamilton dressed entirely in Brooks Brothers suits—complete with tie—for a full year in order to secure a promotion.

Hamilton earned that promotion—and much more. Over the course of her 35-year career, she has successfully scaled the executive ranks of beauty, and today is group president of acquisitions at L’Oréal USA. While her wardrobe has also evolved considerably—today, she wears the likes of Saint Laurent, Valentino and Oscar de la Renta, among others—what hasn’t changed is the length that many women still have to go to in order to reach the senior-most levels of corporate management in the beauty industry.

Despite beauty being a category that is largely marketed for women, gender inequality at the c-suite level persists—and with it, a wage gap that also results in a wealth gap. Not only are women not getting the big executive-suite salary, they are often not getting the expansive stock options and benefits that come with it. And at a time when more women are opting out of the corporate world to pursue entrepreneurial endeavors, the need to attract and retain strong female talent at both the executive committee level and board member level has never been so important. “It’s pay, it’s [women’s] overall earning potential, it’s the business decisions they are brought in on,” said Lisa Marie Ringus, executive vice president of global sales and business development at 24 Seven. “It’s their ability to influence decisions within the organizations.”

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While women have clearly made strides over the last two decades, there is still a ways to go. “In beauty, you do have more women in leadership positions up until the vice president level and president level. The big gap is when you go into the [chief executive officer] level,” said Jill Scalamandre, president of Shiseido’s global makeup center of excellence and president of global marketing for BareMinerals and Buxom. “You see all these women coming up and founding their own brands, being ceo’s and being respected as ceo’s and changing the game. Where it continues to need to change is in the larger, more established companies.” At Shiseido Americas, which is headed by ceo Marc Rey, 81 percent of employees and 60 percent of the senior leadership team are women, according to the company.

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In fact, of the top 20 beauty manufacturers in the WWD Beauty Inc Top 100 ranking, only Revlon is led by a female ceo—Debbie Perelman, who was named to the top post in May. Avon, number 14 on the list, replaced former ceo Sheri McCoy with a male, Jan Zijderveld, in February. Ulta Beauty also has a female ceo, Mary Dillon.

The lack of women in beauty’s c-suites mimics the broader business status quo. There were only 24 women on Fortune 500’s list of ceo’s as of May—that’s less than 5 percent. One of those women, Indra Nooyi of PepsiCo stepped down in October, lowering the overall percentage and leaving just one woman of color in place as a Fortune 500 ceo (Geisha Williams, head of energy business PG&E).

“I wish we did see more women, but I also hope we get to the point where we’re not distinguishing so that it becomes so common that it’s less about gender and more about capability,” Perelman said. “There is room for improvement in terms of increasing the number of female ceo’s in this industry, and frankly beyond, and I think now is the time. You see it in politics, with the increased number of women in politics, and the same thing should be happening in corporate.”

While from a sociocultural point of view, gender equality is increasingly in the public consciousness, research shows that it makes better business sense, too. According to Catalyst, the global nonprofit organization formed in the early Sixties to improve the workplace for women, companies with a higher representation of women in senior management positions financially outperform companies with proportionally fewer women at the top.

In beauty—an industry that employs mostly women and makes products primarily used by women—the general consensus is one of not being so bad when compared to other industries. But in most big beauty companies, women are still not represented in equal numbers to men at the highest ranks.

“My impression is that beauty is one of the most inclusive industries with a lot of women representation across the ranks,” said Sylvie Moreau, president of professional beauty at Coty Inc. “Maybe the tip of the iceberg is still a little bit too male dominated, but under the water, it’s a very equal world.”

Moreau is one of three division heads at Coty, and she is paid less than the two male division heads, according to filings with the U.S. Securities and Exchange Commission. Her base salary is 550,000 Swiss Francs (roughly $568,000), while Laurent Kleitman, head of the consumer division, earned a base salary of $800,000, and Edgar Huber, who oversees the luxury division, has a base salary of 585,000 euros (about $687,000). At Coty, 57 percent of the total workforce, 49 percent of managers, 30 percent of the executive committee and 11 percent of the board are women, according to the company.

“For me, equality means it needs to be equitable not necessarily equal,” Moreau said, when asked about her pay. She notes that she runs a $1.9 billion division, compared to Kleitman’s $4.2 billion segment and Huber’s $3.2 billion business.

That may be so. But salary disparity at the highest levels exists—and seems built into the system. For example, in 2000, when Andrea Jung was the ceo of Avon, which had almost $5.7 billion in net sales, she had a base salary of $897,536, according to SEC filings, plus bonuses and other options. For comparison, Fred H. Langhammer, who was then ceo of the Estée Lauder Cos., which had about $4.6 billion in sales at the time, earned $1.9 million, SEC filings show.

More recently, Tracey Travis, Lauder’s executive vice president and chief financial officer and the only named female executive officer included in the company’s SEC filings, had a $980,000 base salary for 2018, lower than that of any male director at the business. President and ceo Fabrizio Freda earned a base salary of $1.9 million; executive chairman William Lauder, $1.5 million; executive group president John Demsey, nearly $1.2 million, and group president, international, Cedric Prouve was paid $1.1 million, SEC filings show. At Lauder, 84 percent of the global workforce and 53 percent of vice president and above positions are held by women, according to the company.

At L’Oreal, which hires a third party called EDGE—Economic Dividend for Gender Equality—to check over its data, the wage gap in the U.S. market is between 5 and 6 percent, according to Angela Guy, senior vice president of diversity and inclusion at L’Oréal USA. In France, its home country, the gap is about 3 percent, and the overall goal is to reach zero. “If you’re committed to equity, you have to have a way to measure it,” she said. “We’re transparent and vulnerable at the same time. We’re moving toward equity, and we’re not there yet, but we’re getting really close.”

Part of the issue when it comes to the wage gap in beauty is lack of transparency—only the salaries of those at the very top are disclosed—which can lead to pay discrepancies at lower and mid-levels. “There’s not a lot of transparency on wage inequality,” said Esi Eggleston Bracey, executive vice president and chief operating officer of North America beauty and personal care at Unilever. Bracey spent about 25 years at P&G before transitioning to a role at Coty after the acquisition. In early 2018, she joined Unilever. “As I’ve become more and more senior and responsible for other people’s salaries and wages, I can tell where I have suffered from that wage inequality.”

Asked if she thought that was because she was a woman, or because she is a woman of color, or both, Bracey says it was likely a “combination of both,” plus the base salary of starting with a bachelor’s degree—hers is in engineering from Dartmouth—versus an MBA.

While she rose through the beauty ranks, Bracey’s career didn’t really take off until she embraced herself. Like Hamilton, she spent much of her life as a young professional trying to fit in—she wore khaki suits, for example, and styled her hair in a bob, and when others asked what she was doing on the weekend, she would say things like, “Spending time with friends,” instead of what she was really doing—going to Chicago to listen to house music with friends.

But after hearing a talk on diversity a few years into her career, she cut her hair and went natural, and started bringing more of her true self to work. “I became happier in my role, my results became better, it opened up all sorts of things for me,” she said. Crucially, she also gained the support of key colleagues and sponsors, who helped propel her career path. At P&G, when she was looking to transition from home and fabric care into beauty, she planted a seed with a higher-up who could advocate for her behind the scenes. “What I’ve found most helpful is letting people of influence know what I’d like to do next,” she said.

While Bracey has found her stride in the corporate world, many other CPG and beauty executives have exited bigger businesses in favor of smaller, more entrepreneurial opportunities. This is increasingly true of younger executives.

“Behaviors at so many levels, in terms of priorities for someone’s life, have shifted,” Ringus said. She notes that when it comes to their jobs, Millennial tend to prioritize climate and culture in addition to pay.

“There is a shift in terms of what’s important that is being driven by what’s happening in the country,” Ringus said. “A lot of those social issues have made people take pause and say, ‘Wow, I don’t know if this company or brand really represents me, and this is important to me.’ They’re evaluating not only how they purchase [as consumers], but where they want to go to be inspired when they go to work every day.”

Consequently, many Indie beauty brands emerging in the modern marketplace have been founded by women, a factor which certainly affects the ceo pipeline, experts agree. According to the Indie Beauty Expo, 66 percent of the brands that exhibited at the August showcase in New York were female-owned or co-owned, and at the London show in late October, 69 percent of the brands are female owned or co-owned.

Hamilton, who works with Indie founders as part of her new M&A-focused role, calls it “one of our greatest, brightest pipelines. It’s demanding that the way we look at a ceo’s role evolve to reflect some of the real values that these female founders [have],” Hamilton says.

Hamilton’s outlook on gender equality has shifted over the 34 years she’s been with L’Oréal, which has a workforce that is 69 percent women and a board of directors that is 46 percent women. “In the beginning and middle of my career at L’Oréal…I felt if I just kept advancing and chipping away at what I call the plexiglass ceiling, that my being in the c-suite, even if I was only one of two women in a 15-person meeting, that me being a role model would be enough,” she said.

Several years ago, though, Hamilton had an epiphany. “I realized that much deeper work needed to be done on this front,” she said. “To really change gender inequality, we needed sophisticated programs that are sustainable. When you’re talking about gender equality, it can very often become people in the room talking and gossiping and getting upset,” she continued. “At this stage in my career, I decided that was a ridiculous waste of time because it wasn’t moving the needle. So what were we really going to do to move the needle?”

Hamilton started with L’Oréal leaders heading to Harvard’s Women in Power program, which trains women on negotiation, networking, asking for raises, etc.—and that evolved into Harvard coming to L’Oréal to teach a company specific, coed-version of that program.

“What needs to really shift now is that any discussion of gender equality must be coed,” Hamilton said. “Women have to be the catalyst and deeply present, but it’s as important for men to understand it so they can change behavior.”

Groups like the 30% Club, which strives to push boards to include at least 30 percent women, are taking on that challenge. William Lauder, executive chairman at Lauder, joined the organization after its founding chairman, Peter Grauer, the chairman of Bloomberg, asked him to. “It’s not as hard as some people make it seem to find capable, qualified women to be board members,” said Lauder, who presides over a board that is 47 percent female.

The company has also made promoting women and wage equity a priority, and Lauder, like Perelman, emphasizes capability over token efforts. “The gender conversation gets into representation as opposed to capabilities,” Lauder said. “We want to make sure that whoever we choose for leadership roles in our company are the most qualified and capable executives for the role.”

Subsequently, the company has implemented specific inclusion and diversity efforts, according to Marilu Marshall, chief inclusion and diversity officer at Lauder, and the daughter of Cuban immigrants, who notes how her role has evolved over the past decade. “At that time, it wasn’t as proactive as it is now—it was very much a reporting function,” Marshall said. “Today, it’s an important part of our business strategy.”

In addition to those efforts, Lauder has several “employee resource groups,” Marshall said, including a women’s leadership network co-chaired by Travis, group president Jane Hertzmark Hudis and general counsel Sara Moss.

For his part, William Lauder said that appointing a woman ceo is “entirely likely at some point in the future.” He’s not alone in that sentiment—everyone interviewed for this story say they expect to see more women ceo’s in the future. But that change is not without its roadblocks. One is network differences.

“I can’t think of one company that couldn’t be run by a female ceo. To me, that is not the issue,” she said. “It is the trust factor. It is the c-suite and who is occupying the c-suite today, and it is really trying to break down some of the network. There’s still a lot of work to do to put women into the same network at the same level to build successful nominations.”

Another impediment, according to Ringus, is prioritization. Beauty companies are working to change their culture to meet the demands of modern workers—adding different types of benefits of flexible working options—but that, in conjunction with broad industry disruption from direct-to-consumer brands and social media, can sometimes mean gender equality is not making its way to the top of the corporate checklist.

“This is now one topic of 50,” she said. “All of these brands and businesses are here to drive results and those priorities are taking a front seat.…We have leadership across boards—men and women—who are really having to shift what got them to their success, quickly.”

Salaries, in some cases, are shrinking, Ringus notes. When a high-ranking executive exits a business with a $5 million package, they aren’t necessarily being replaced at that pay grade, she says. Pay is also affected by industry newcomers attracted from tech and fashion. Beauty pays more than fashion, Ringus notes. But fashion executives joining the industry are likely used to gender inequality. According to a recent report by McKinsey, only 14 percent of major fashion brands have a woman at the top, and 100 percent of women surveyed saw gender equality as an issue in the industry, while fewer than 50 percent of men did.

“One of the things we saw in fashion—and you could make a relevant comparison—was because there are so many women in the industry, primarily at lower levels, there wasn’t a perception that there was a problem,” said McKinsey’s Stacey Haas, who coauthored the fashion report. “The number-one thing we saw in terms of an issue was lack of awareness that there was a problem.”

The study found that part of the reason women weren’t advancing to the highest ranks was because they didn’t know the rules. While women in fashion were more likely to ask for a promotion than a man in their younger years, those requests decreased at the vice president level, Haas said. “One thing we heard through interviews was in those earlier tenures, their manager was often a woman. Women felt more comfortable asking another woman for a promotion.”

Such is not universally the case, but women interviewed for this story acknowledged they had been passed over for promotions in part because they were not always clear on “the rules.” Until the general manager level, Moreau, was promoted through the P&G ranks based on merit. “Becoming a general manager is a pivotal point in P&G and few people reach that level,” she said. “At some point, I became clear that unless I specifically asked and made my ambition of becoming a general manager explicit, this would not happen—or at least, it would not happen as fast.

“I knew my boss at the time very well, and I found a way to tell him casually, ‘You know what? What would mean the world to me is that I become a general manager before I’m 40.’ He knew my birthday,” she noted, adding that she didn’t want to change her overall tone, but did want to make her ambition explicit.

Hamilton, too, said she had to make it expressly clear that she was interested in being considered for larger jobs when she was heading L’Oréal Paris. After being passed over for a role, Hamilton asked higher ups if she was considered for the position. “They said, ‘No, you haven’t asked for the job.’”

“I said, ‘Oh—I didn’t realize I needed to ask for the job.’”

So she asked, and roughly a year later, landed the position as head of L’Oréal USA’s Luxe Division, where she tripled the size of the business over the course of a decade. And those are results that anyone, regardless of gender, can appreciate.