How to Close the Gender Pay Gap in Your CompanyNovember 1, 2019
The gender pay gap is a hot topic these days, and rightly so. Women have been in the workforce for decades, yet most Western countries still report unequal pay overall between men and women.
In this post, we cover how to close the gender pay gap by giving a list of actions your organization can take and introduce the tool that will help you reach pay goals.
What is the gender pay gap?
The gender pay gap is the disparity of overall compensation between men and women. It is typically measured by taking median salaries of working men and women. You can observe the different levels of gender pay gap in this chart here.
What causes the gender pay gap?
There are many factors affecting the gender pay gap. Many today even argue that the gender pay gap is a “myth” because of the personal decisions of women and the way it’s calculated.
The gender pay gap is bigger than just the median salary numbers. According to the Center for American Progress, “nearly 60 percent [of the American wage gap] is influenced by all the structural and social factors that drive the decisions women make about where and how long they work. These factors constrain the choices that lead them to work and earn less.”
In other words, many of the reasons why the gender pay gap exists can be contributed to how females are socialized from childhood, which leads them to continue choosing “traditionally female-dominated roles.” While this was a study conducted in the U.S., it is safe to say we can assume the reasons for the gender pay gap are highly similar in other countries.
Why we need to bridge the gender pay gap
There are multiple reasons why the pay gap needs to be bridged. Not only are societies and governments contributing to a more gender-equal society by closing the gap, but there are also other reasons.
Societies and countries must bridge the gender pay gap are because it is the fair and right thing to do. Women performing the same or similar work to male colleagues should be paid the same wage because they’re both making equal contributions. As more countries enact more equal pay laws and regulations, companies with gender pay gaps face potential legal prosecution (and negative PR) when they do not pay men and women fairly for the same work.
Maggie Germano, a financial coach, says “the less women earn over the course of their careers, the less money they’re able to save for retirement.” This problem is compounded by the fact that women, on average, live longer lives than their male counterparts by six to eight years.
A lot of progress was made with gender pay disparity in the 1980s and 1990s when more women began earning an education and entering the workforce. However, progress has since plateaued. According to Equality Can’t Wait, at the current rate, it will take 208 years to achieve gender equality in the U.S. alone.
How to close the gender pay gap
Here are some ways your organization can take actions to close the gender pay gap:
Conduct a pay analysis of your company
If you aim to close the gender pay gap, it’s important first to examine the current state of pay within your organization. This will highlight those employees who are currently underpaid. We have more information on how to conduct a pay gap analysis here. Organizations may want to task this to a specific department that handles employees and/or pay. This could be HR or Finance. If your country has specific laws about gender pay, it may also be helpful to consult with a legal representative. A pay gap analysis should examine:
- Segmented salaries by seniority, job title, and gender to identify outliers
- Other types of pay, such as overtime, benefits, and bonuses
- Gender ratios in different departments and levels of the organization
- Hiring practices (such as negotiation) if your organization keeps a record of this
Conducting a pay analysis is the first step in ensuring fair gender pay practices and shows you where the problems are so they can be fixed.
Revise hiring and promotion practices
Here are some changes you can implement in your organization in regard to hiring and promotions:
To start, make sure salary ranges are the same for the same job title. At the top level of the company, it helps to promote a culture of normalizing salary negotiations for women. Often, when women push back on salary, it can be seen negatively by hiring managers. This is an attitude you should work to eliminate if it exists in your organization. The first step is awareness.
Create a set of rules for hiring, performance reviews, and promotions to ensure pay remains equal among genders. Gender bias can happen in unexpected ways. Having a set of rules that leaders and managers must follow help reduce the risks of gender imbalance in the workplace. One important rule is to simply stop asking candidates for their previous salaries. Stick with the ranges decided on by the company for the position.
Rules can be based on the laws (if any) pertaining to your country. For example, Iceland has a scoring system that mandates employers to rank jobs based on things like physical strain, responsibility level, and types of responsibilities. For jobs with the same score, pay must be the same.
Make Your Company Pay Transparent
There are two ways to make pay transparent withing your organization: making pay public (in some countries this is already the law) and making pay transparent among employees within the organization. This helps hold not only your organization accountable but encourages other organizations to do the same.
You should also be upfront about pay by telling job seekers whether a salary is negotiable and communicating the salary range you must stay within.
Heartpace Pay Module
The pay gap may have lasted longer than many would like. On the plus side, many companies are taking action to eliminate pay disparity between genders. With the Heartpace Pay Module, conducting a pay analysis of your organization and getting buy-in from company leaders has never been easier. Learn more about how our tools can do the work for you in promoting pay equality for everyone.