Closing the Gender Pay Gap

Over the last twelve months we have seen increasing focus on women in the workplace. Issues around diversity, the percentage of women on boards, and the gender pay gap have been highlighted.

In the latest of our series of articles with academic leaders, Moon Consulting talks to Professor Hazel Conley, from the faculty of Business and Law at UWE about the gender pay gap (GPG), and how transparent pay systems can help achieve pay equality.

In 2018 the UK government required all organisations employing more than 250 employees to report their gender pay gap under the Gender Pay Gap Information Regulations 2017. The Regulations allow gender pay gap comparisons to be made between organisations.  However, there is an additional underlying issue which also needs to be considered – the concept of transparency within organisations. In April 2017, the European Commission published a report which concluded that the main obstacles to implementing pay transparency measures included ‘sensitivity and confidentiality issues around revealing wages, administrative and financial burdens, a lack of collective bargaining structures and the fear of levelling down.’ Without true salary transparency across all roles, and at all levels, the areas where pay gaps exist within organisations cannot be easily identified meaning that little can be done to address the GPG and the equal pay legislation cannot function as it was meant to. Therefore, it could be said that the introduction of transparent payment systems is the first essential step in closing the GPG.

This may seem like a simple solution with the right management, but in reality, it not only needs to be driven from the top down but also requires some fundamental changes to the way organisations operate their pay systems.

Currently, the majority of UK organisations have decentralised pay structures, meaning that pay is unilaterally set and is often related to performance. A great deal of research has found that, even when pay systems appear to be non-discriminatory, inequality is embedded in gender-based assumptions of skill and worth – features that are not easily identified by simple pay models. For example, many of the narratives supplied with the gender pay gap information provided to the government in April argued that much of the gender pay gap in organisations could be related to men and women doing different jobs. In this argument there is an underlying belief that the work that women do is less valuable than the work that men do. If this is the case organisations need to break down the gender barriers in their organisations or re-evaluate the contribution that women make before the gender pay gap can be closed.

Ways that companies can incorporate better levels of pay transparency include clarifying how different pay grades are applied to different positions, why men and women are recruited to different jobs and conveying and documenting the reasons for pay differences, such as levels of education and degrees of experience. In addition, showing all employees how they can progress through the company's pay ladder can function as an incentive to grow and will help to close the gender pay gap.

Yet, in order to implement any of these relatively simple changes, there still needs to be executive buy-in. There are two things key things that can be done to alleviate concerns at board-level. First, explain what transparency is and isn’t, why it is important and what the benefits are including reducing the GPG. Second, link pay transparency with results that matter to the board. If your board is concerned with retention and employee turnover, explain how higher transparency can be linked to a lower intent to leave, to becoming an employer of choice and how breaking down gendered job roles can alleviate skills shortages.

Without a doubt a culture of secrecy in relation to pay will hinder transparency in relation to the full extent of the GPG. Unfortunately, collective bargaining, anti-discrimination legislation and voluntary initiatives encouraging companies to be more open about pay have not succeeded in making the GPG more transparent.

In conclusion, this is an issue that should remain high on every board agenda. While the greatest pressure for change is likely to come from employees, it is up to employers to proactively move towards progressive change.

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Moon Consulting are experts in senior management and board-level recruitment, and we understand how gender diversity help to can drive a business forward.

We work with our clients to ensure that pay structures are fair, non-bias and truly reflect the skill, experience and worth of each individual candidate.

Throughout our recruitment process we work to ensure that our campaigns are gender-neutral and actively seek to create shortlists that are gender-balanced.

For more information on how we can help you, contact us on recruit@moonconsulting.co.uk or call us on 01275 371 200.