Let’s get one thing clear first: The gender pay gap isn’t about women earning less than ‘the bloke sitting next them’. Like-for-like gaps exist, yes. But for the most part, it’s illegal to pay employees drastically different amounts for the same value of work.
But when you hear stats like “worldwide, women only make 84 cents for every one US dollar earned by men” what they are talking about are the average wages of all women in the workforce versus the average wages of all men in the workforce. This 16% deficit for women is what we mean when we talk about the gender pay gap.
And when you read things like “it will take 132 years to reach full parity” this is a calculation of how long it will take to close this gap at the current rate of progress.
132 years. It’s a dismal figure. But we don’t really have to sit and wait that long. There are ways to reduce the time it will take, by increasing the effort we put in to close the gap.
First, let’s look at why gender pay gap is a problem worth fixing NOW (and not in 132 years)
“The gender pay gap does not just impact a woman once in her life. It has a compounding effect that results in a woman’s reduced earning capacity over her lifetime.”
The gender pay gap means women accumulate less money for retirement and are more likely to retire in poverty.
If we corrected the pay gap overnight, not only would it help the individual women who are currently disadvantaged by it, but the economic benefits would also be substantial.
The increased wages that would suddenly be injected into the economy would be used for purchases, houses, travel, debt payoffs, and much more. And whatever burden it would place on employers caused by the increased wages would, according to many economists, be quickly corrected by the fact that there would be more money available for consumers who want to purchase their products or services.
At the workplace level, the gender pay gap can often stem from men being in more of the higher earning senior positions, while women make up the lower-earning entry-level or administrative roles. Allowing this pay gap to persist means these workplaces are missing out on profits, sales, and productivity increases. Research has shown that workplaces with a higher percentage of women in senior positions experience.
3 steps leading employers are taking to close the gender pay gap
For companies, the challenge of closing the gender pay gap needs affirmative action such as those taken by our Endorsed Employers below.
1. Gender pay gap analysis
It’s all too easy to fall into the trap of thinking that a lack of complaints means that a company is doing just fine regarding pay parity. This might not always be the case.
Instead, look at the data, which will paint a more accurate picture.
For every employer we spoke to, the first step in addressing the gap was to assess the situation. This usually involved some form of pay audit that looked across roles, demographics, responsibilities, education, experience, and performance. This helped them understand whether a gender pay gap existed at the company and, if it did, measure how significant it was.
Payroll data and analytics play a big part in this. Philip Morris International (PMI) used an external consulting service to conduct an analysis of their salary data. 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 employees of the company.
The latest gender analysis data from PMI shows that women earn £1.08 for every £1 that men earn when comparing median hourly pay.
2. Performance, promotions, and pay negotiations
Gender-based compensation disparities often begin when the terms and parameters of a salary negotiation are vague. This can be especially true at the initial hiring of the employee but can compound further and further through promotions and pay rises negotiations.
Even when controlling for other relevant factors, women consistently end up coming out of these negotiations with significantly less than men. When women learn that an offer is negotiable, they negotiate as often as men do. However, a study conducted by Harvard Business School has shown that women who felt empowered at the negotiation table were more likely to reach worse deals or no deal at all. The more powerful the woman who negotiated in the study, the more powerful the ‘backlash’ response it triggered. The study authors suggested this was likely based on ingrained stereotypes and subconscious notions about how women “should” act.
So, if the women are stuck in this catch 22 – it’s up to the organization to make the change by:
- Providing clear salary information.
- Examining actual salaries in your company and evaluate them for both historical and present-day parity.
- Looking at how your employees advance internally. If men are advancing further and faster than women in a statistically significant way, then gender disparity is likely at work here.
If women aren’t seeking more significant roles, it’s a good idea to spend some time examining why. If work culture or specific personalities are sending out the “don’t waste your time” signals to women in your company, you’ll need to address that promptly.
Woolworths Group, one of Australia’s largest retailers and employer of women, has been working on closing the gender pay gap over the last five years. To overcome biases associated with assessing the merit for promotions and pay rises they measure equal work based on the position title, career stream, and career level and consult widely with the business to ensure alignment. Skill, effort, responsibility and working conditions are also part of the equation.
The latest gender analysis data from Woolworths Group shows that the male/female pay gap was less than 1%!
Find out what other initiatives and benefits they have that are helping women to thrive.
3. Attraction and retention of women into senior leadership positions
When companies achieve better representation of women in the top jobs, something interesting happens – the gender pay gap shrinks.
But how do you get women into the top jobs if women aren’t staying in your company long enough to reach those positions?
When a company isn’t retaining well performing women, the issues could be anything from lack of progression opportunities, or lack of reward for performance as we discussed above. Discriminatory cultures, or the presence of sexual harassment can also be underlying problems, which can affect more than just your gender pay gap.
Studies of “up-or-out” professions such as consulting and law, have shown that junior women are less likely to leave if other women hold senior positions; their presence in the upper ranks demonstrates that career progression is possible.
When more women are in positions of power, sexual harassment—another drain on the retention of women—also declines.
Things you can do to improve the attraction and retention of high performing women:
- Ensure high-achieving women in your workplace are recognized equitably in your succession planning.
- Assess the language and methods used in recruitment aren’t turning away high-quality female candidates.
- Set quotas or targets for the equal representation of women and other underrepresented groups and track your progress towards them.
nbn are committed to achieving 40% women in leadership roles by 2025. This is a prominent target in the organization and is regularly measured, tracked, and reported to Board, Executive Committee, and Business Unit Leadership teams. Women in leadership at nbn has increased from 31.6% in June 2020 to 32.4% in June 2022.
They have implemented a target of 50% women on recruitment shortlists for all roles and have committed to gender-diverse interview panels. nbn’s Graduate Programs have targets of 50% female intakes too.
Over the past six years, nbn’s gender pay gap has closed from 14% to 1.1%. And they will use every opportunity to close it altogether.
Are these the only steps to solve the pay gap problem?
No, of course not.
The median salaries within women-dominated industries like nursing and teaching, are still scandalously less than the median salaries in male-dominated industries like construction, tech, and finance.
Social stereotypes around the division of unpaid labour and caring roles mean that women are continually being pushed out of the workforce.
Because women are overrepresented in low paid work, raising minimum living wages (or wage floors) would also reduce the gap dramatically.
But these are bigger problems that require more systemic overhauls. The steps we outline above are good first steps. Steps that are easily actionable at the organizational level. And steps that can actively reduce that 132-year figure down to a timeframe where gender pay parity will be something we might just be able to see in our own lifetime.
Want a career with an organization that’s committed to closing the gender pay gap?
Check out the current job vacancies for the employers featured in this article.