Is the gender pay gap a myth? Unfortunately, it’s not; it’s so real and present that women are losing around $900,000 throughout their careers — not to mention the impact on their pensions.
Job seekers of all genders have the power to challenge and change this unfortunate truth by applying for roles with companies that are truly committed to closing this gap. To help make this happen, we spoke to some of the WORK180 Endorsed Employers leading the change and asked them to reveal what actions they have taken so far.
First, let’s look at the gender pay gap problem
Worldwide, women only make 84 cents (16% less) for every US dollar earned by men. In the US, women earn 18% less than men. This pay gap widens depending on factors such as location, occupation, family status, and is even greater for underrepresented groups.
But isn’t it illegal to pay women less?
Yes, it is illegal to pay employees different amounts for the same work. The gender pay gap is not caused by unequal pay; it’s caused by the disparity in equal opportunities between men and women in the workplace. It’s about women still not getting access to the highest-paying jobs.
The Equal Pay Handbook reveals that this is caused by several issues: “Women-dominated jobs may be paid lower over-award payments than men-dominated jobs; job evaluation processes may undervalue women-dominated occupations and therefore set lower pay rates compared with male-dominated jobs, or part-time workers may not be paid the same as full-timers doing the same jobs, on a pro-rata basis.”
How companies are closing the gender pay gap
The gender pay gap is caused by multiple factors. For companies, this means the challenge cannot be overcome simply by addressing salaries alone. They need to introduce affirmative policies such as those shared by our [Endorsed Employers (https://us.work180.co/employers/) below…
Five steps leading employers are taking to close the gender pay gap
1. Gender pay gap analysis
For every employer we spoke to, the first step in addressing the gap was to assess the situation with a pay audit that looked across roles, demographics, responsibilities, education, experience and performance. This helps them understand whether a gender pay gap exists at the company and, if it does, measure how big it is.
Payroll data and analytics play a big part in this. For the UK Endorsed Employer Mercury, studying this data allowed them to get a big picture of the organization and realize the need for internal promotions and strategic senior hires to entirely eliminate the disparity:
“This year, through the use of data analytics, we identified a gender pay gap which has now been significantly reduced to 6.3%.”
Here are some more great examples of employers using pay audits to address the gap:
PwC used salary data to conduct an analysis for Philip Morris Limited (Philip Morris International). Information gathered in employee surveys and focus groups was also a fundamental part of the strategy to start a conversation about the gender pay gap among coworkers.
OZ Minerals also conducts market assessments annually to ensure remuneration is competitive and equal for everyone with remedial actions taken as needed.
When the company ran its first pay study in 2016, Lion found that they had an average gap of 3.2%. One of their team told us:
“We made the decision not only to immediately close the gap between like-for-like roles, making salary adjustments for the women and men impacted but to communicate the findings of the gender pay gap analysis.”
The result: 1,600 salaries adjusted, doubling the pay-rise budget to $6 million.
“We knew it was the right thing to do and we had to find a way to fund it, accepting that as an organization we’re constantly evolving and we need our workforce to evolve with us.”
Western Power’s approach fosters and encourages conversations about pay equity in the company as well, which has resulted in actions like remuneration adjustments when justified. But the team told us that it’s the annual remuneration review process that has really paid off; highly detailed analysis and a continued check on pay inquiry by gender showed them that, on average, they don’t have a gender pay gap!
Woolworths Group, one of Australia’s largest retailers and employer of women, has been working on closing the gender pay gap over the last four years. The embedding of systemic controls to reduce bias from talent processes has been their key initiative to bridge the gap, and it seems to be working; as of August 2020, the male/female pay gap was less than 1%!
“Closing the pay gap continues to remain a commitment as we know that pay parity is at the heart of gender equity.”Rachel Mead, Head of Diversity & Inclusion at Woolworths Group
When it comes to assess and grade roles, a globally accepted job grading methodology and salary framework are the go-to strategies for Rheinmetall Defence Australia. The company focuses on merit to ensure each role adequately and fairly reflects the value they bring to the organization. Appropriate salaries for these roles are linked to a market relative pay point that is established by the framework, and organizational rulesets ensure this method is applied fairly across positions, without bias or preference for gender. The company also compares this methodology against gender pay data.
Stanwell’s practice is to analyze employees’ salaries from a gender perspective twice a year and report the results to the executive. This is then relayed to the People and Safety Committee annually. Gender is also considered when reviewing annual remuneration increases and performance-based incentives.
2. Remuneration discussions and adjustments
A regular audit has been the most effective strategy for most companies, not only to identify the problem but to keep track of their gender pay gap. For example, Philip Morris Limited (Philip Morris International) started with a two-day audit, followed by a one-day audit every year to monitor the progress. All valuable feedback and recommendations from these audits are shared with managers and the head of HR, and these efforts have earned them the Global Equal Salary Certification.
A similar approach was applied at Lion; in the beginning, the team was conducting multiple audits a year to identify any inconsistencies and take immediate action. Since the results proved the efficacy of this approach, they are now auditing only once a year to ensure it remains within 1%.
Here’s how other Endorsed Employers are using remuneration discussions and adjustments to address the gender pay gap:
Rheinmetall Defence Australia reviews and compares the information against gender pay data. Where intervention is required, this is applied through the organization’s annual remuneration review process.
For EY the goal is to reach a ‘zero firm-wide pay gender gaps for peer to peer roles’. For the last six years, the strategy has been a like-for-like organization-wide gender remuneration gap analysis for all roles to ensure there is no unconscious bias in how the company remunerates its people. The determinations are based on multiple variables including rank, geography, competency, and performance.
Other employers establish the remuneration based on peer parity, role level, merit, qualifications and other factors. This is the case for OZ Minerals and ClearScore, companies that have developed a framework that eliminates gender bias when it comes to making salary offers.
Woolworths Group also measures equal work based on the position title, career stream, and career level and consults widely with the business to ensure alignment. Skill, effort, responsibility and working conditions are also part of the equation. This is similar to the approach of Mercury, which implemented a salary grade framework to ensure fairness and inclusiveness when evaluating and rewarding all employees. One team member said,
“This journey has taken us on the transformation of our Human Resources function and a greater commitment than ever before towards diversity and inclusion.”
One of Western Power’s guiding principles is: “Remuneration decisions will be equitable (including gender pay equity) free from bias, merit-based and underpinned by a transparent and consistent methodology”. To ensure this, the company has developed a Remuneration Standard where any gender pay inquiry is addressed.
Sodexo uses the Korn Ferry Hay methodology to carry out job evaluations and the grading process to determine the job’s value. The pay structure and reward philosophy are based on three areas that reflect an individual’s competence and experience at any given level. The rate of progression within a pay range is linked to individual performance. In addition, Sodexo uses pay data to identify and correct salary discrepancies. Each month, this information is independently audited, analyzed and compared to ensure benefits are consistently applied within policy. (For roles underpinned by an award or enterprise agreement, Sodexo uses set pay rates.)
For DHL Express, programs such as Global Talent Acquisition Policy and Global Compensation Policy guarantee a significant representation of women in management and non-discriminatory hiring and pay decisions.
After finding women in the business were starting from a lower salary base as they did not negotiate their starting salary (whereas more men did), Stanwell also adjusted how remuneration is determined during recruitment.
3. Talent acquisition best practices
On a more granular (but no less important and impactful) level, WORK180 Endorsed Employers are using the hiring process as an opportunity to solve the problem from the very start. Here are some of the best recruitment practices for addressing the gender pay gap:
- The company doesn’t ask potential employees about salary history in the interview process to reduce bias.
- During any part of the recruitment process, candidates are not asked about current or past remunerations and salary offers are not based on this information. (Talent Acquisition lead the remuneration discussions, recommendations, and offers.)
- Offers are based on market rates and data for roles, and come with guidelines to adjust when required to ensure fairness and equity.
- The Talent Acquisition team has been trained in remuneration and DEI principles and are responsible for ensuring that the offer is fair.
- The company has banned salary history questions in interviews.
- They also guarantee a certain number of women in any application process or pool of candidates.
- Grading all roles by salary level prior to the recruitment process.
- Asking a candidate’s salary expectations for the role they are applying for, not their salary history.
- Ensuring gender-balanced shortlists and interview panels.
- Providing open feedback from hiring managers for their hiring decision.
- The offer comes from the set salary budgeted, regardless of the candidate’s gender.
- Application of a job grading methodology and salary framework.
- Appropriate salaries for roles are linked to a market relative pay point that is established by the framework. (Organisational rulesets ensure this method is applied fairly across roles, without gender preference.)
4. Measuring and tracking progress
As mentioned, the first step is to identify the issue. However, if the situation is not monitored, how can the progress be measured? Here’s a list of some of the most effective methods that the companies we interviewed are using to keep track of their efforts:
- Gender Pay Gap Report: Currently, the company’s gap is approximately 4%.
- P&C directors receive monthly gender metrics covering populations, seniority split, functional split, and leaver data, including voluntary redundancy. The goal for them is 40% women in management by 2022.
- The company conducts pay analyses every year to keep the gap at zero.
- Pay parity reviews in line with remuneration cycles.
- Ongoing out-of-cycle pay reviews.
- Formal role evaluations and internal and/or external benchmarking based on the assessment of individual performance, contribution, competency, capability and potential.
- Annual remuneration review process with six pay indicators and midpoint data to help identify and correct salary discrepancies.
- Monthly independent audits on pay data.
- HR training modules to support their Reward Philosophy, establishing a clear framework of practical steps to improve pay equity.
- Focus on salary expectations (not on current salary level) during candidate conversations.
- Maintaining a pay equity gap of less than 1%.
Meet more organizations actively removing the barriers preventing women from being hired, promoted, or thriving in management positions. Their actionable plans go beyond ‘good intentions’.
5. Ensuring a gender balance
Many of the WORK180 Endorsed Employers interviewed brought up the importance of promoting women in leadership positions to creating competitive gender-balanced teams. In fact, according to Sodexo’s own research, a gender balance ratio of 40:60 (no matter the skew) achieves better productivity and an 8% increase in employee retention! Currently, the company has 40% managing positions filled by women, and 48.7% of the workforce represented by women.
For Mercury, a company in the construction industry, it’s a matter of future sustainability; the organization knows it’s critical to its industry that they encourage more women to choose a career in this field. On the same path, ClearScore focuses on getting more women in the tech sector by ensuring all interview panels consider a gender-balanced shortlist.
Woolworths Group‘s board now has an equal representation of women and men as a result of a long-term commitment to improving gender equity, especially in senior leadership roles. Lion, on this front, launched the [email protected] career and leadership development program to accelerate the development of talented women, providing them with the leadership skills to advance in their careers and become future leaders.
The target for Lion is to increase the gender representation across all teams at all levels by 2030. The details are: 40% men, 40% women, and 20% either. The company plans to get there by promoting inclusive policies such as flexible work policy, families at Lion policy and Domestic abuse policy. As one team member said,
“We know that diverse teams deliver better innovation, better customer and consumer advocacy, and stronger financial performance.”
Tools to identify and close the gender pay gap
From determining their remuneration structure to promoting women’s career leveling and advancement, here are some of the programs and systems the employers are using:
Top tip for job seekers:
When interviewing, ask, “Do I have parity with my colleagues?” and “What tools does the company use to determine the salary structure?”
Remuneration Recommendation tool: It uses the data to locate the offer within the remuneration range and to compare it to the average compa-ratio for that role across the company. After a full analysis, Talent Acquisition shares the results with the hiring manager. The hiring manager can then make a final and informed recommendation based on the internal comparator and market rate.
It has a defined pay structure by the level of the position, providing clear indicators of what are the competencies needed for each level. This system encourages internal mobility in a bias-free way. Progression is the tool used to communicate this framework and get feedback through the quarterly engagement survey.
Pay Parity Review methodology is an analytical work that helps to identify gender pay gaps between men and women from the same team by grouping positions and career streams. The team told us that,
“[Woolworths’] last review resulted in a statistically insignificant less than 1% gap, which we will aim to maintain.”
- The SoTogether advisory board is one of the tools created to align with the company’s global commitment to diversity. It’s dedicated to promoting women’s advancement at the company and focuses on five priority areas to achieve maximum impact: leadership development, communication, gender networks, HR processes, and flexibility.
- SheWorks is a program that offers job shadowing opportunities to marginalized women from local communities. It provides women with practical work experience which helps establish relationships within the company and opens doors to future employment opportunities at Sodexo.
Use the WORK180 job board to see an employer’s pay equity actions, benefits, and policies before you even apply! Head to our transparent job board.
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Find a workplace that will support equal pay for an equal value of work
Recognizing the importance of closing the pay gap is an action aligned with Full Employment and Decent Work with equal pay – UN Sustainable Development Goals (SDGs). These goals provide a clear blueprint for achieving gender equity by 2030 — a mission both WORK180 and 193 Member States of the United Nations are firmly committed to.
The WORK180 Endorsed Employers featured in this article have specifically committed to taking affirmative steps towards this goal. Independently, we measure, track, and prove how effectively they are fostering gender equity via the WORK180 Gender Equity Index.