Resolving the gender pay gap

The gender pay gap has been the topic of much media attention recently. But it is all pretty descriptive: shocking horror, women get paid less than men. As if that wasn’t enough. The Equality Bill was passed in its second reading by the Lords last month. Consultation on the guidance will begin on Monday. The Phase 3 inquiry into the gender gap in financial sector pay is also underway. This should allow us to move beyond the descriptive information we have known for years to concrete solutions to the problem. While we wait for recommendations from the Equality and Human Rights Commission about closing the gender pay gap, I thought I would do some research on what companies should do to get ahead of their game.
Lauryn Franzoni is Executive Director of ExecuNet. She says that corporate HR and talent management leaders need to examine their compensation plans in order to determine if there’s a gender gap. ExecuNet is a private network for business leaders. “If there is a discrepancy, they should immediately focus on closing it. The cost of losing key business leaders, regardless if they are female, is much greater than most companies realize.”
Managers should not assume fair starting salaries and fair annual increases. It’s not that managers aren’t trying. The market rate for different skill set changes depending on the scarcity of that resource. After the dot-com bubble burst, there was plenty of web project managers. People who had earned a high salary three years ago would have to settle for less. This can lead to huge discrepancies in a department over the course of many years. An example of a good start is to look at the results from an internal analysis on who gets paid for what work.
Pay audits: The case for it
Cy Wakeman, a HR expert, says that companies should at minimum inventory their salary dollars every two years. She says that one filter to examine is the view of dollars paid to women in similar positions versus men. “If one or more of the positions is dominated by women or men, it is important to examine the value of these positions to make sure that the company isn’t discriminating on a large scale and presenting it as an issue with market value.
However, you need to be careful about what data you collect and how you manage a pay audit. Dr. Sasha Galbraith is a Galbraith Management Consultants partner and an expert on diversity issues. “Pay audits can be helpful if they’re done objectively, openly, and comprehensively.” She adds that most companies tend to exclude certain data which can lead to skewing overall results. “Another useful audit is to compare education, tenure, pay, and gender. These data can often be used to track pay and gender gaps that cannot simply be explained by education or tenure.
This analysis can help companies identify biases within the company. These biases are not uncommon in companies. However, it is possible to find them if you are influenced by your personal beliefs. Galbraith says that it might be a belief that you won’t be promoted if you don’t go to a certain university or have a particular degree. Biases can also be subtle, such the belief that women shouldn’t be allowed to manage construction sites in Muslim countries. However, that experience is necessary to be promoted.
What else can we do besides auditing?
Pay audits are not enough. Wakeman states that “simple auditing to ensure men and women are paid equally is completely missing the point of using dollars for talent to be turned into productivity – male and female.” “A better approach is not to focus on gender but to base pay on the value of the work.