Six reasons your company can’t afford to ignore its gender pay gap

Beyond the moral case for workplace equity, companies stand to lose a great deal by ignoring their gender pay gaps. In this article, we share six of the pressing reasons an increasing number of employers are making it a priority:

1. Loss of talent and innovation

2. Missed opportunities for growth and expansion

3. Impact on consumer behavior

4. Decreased employee morale and engagement

5. Reputation damage

6. Legal risks and compliance issues

An important note

The gender pay gap is not a lack of equal pay for equal work (which is illegal). It refers to the gap in overall earnings of men and women in the company. This gap usually favors men, with barriers such as stereotypes and biases limiting women’s access to higher paying positions in the company.

If you’re struggling to see or explain the power employers have in removing the barriers forcing women into lower paid positions, we strongly recommend the myth-busting section of our article: What is the gender pay gap (and doesn’t even exist).

1. Loss of talent and innovation

A lack of provable effort towards gender equity in your workplace is likely putting off or pushing away talented individuals:

86%

of all respondents to our global What Women Want research said they somewhat (27.7%) or strongly (58.6%) want to know what employers are doing to close their gender pay gap.

This is not only holding your team back in terms of innovation and growth (as we will explore in point two), but exacerbating the problem further! Our research shows that candidates and employees are increasingly concerned with workplace equity. If your organization isn’t proving it considers it a priority too, women and marginalized groups will find employers who are. (It’s just one of the many reasons over one million people a year visit our transparent career platform.)

2. Missed opportunities for growth and expansion

Employers who fail to address the reasons for their gender pay gap (aka, why women aren’t taking on or remaining in your company’s higher paid positions), will struggle to develop diversity — especially in senior levels of your business. And a lack of diversity means your workplace will continue to be made up of similar people, with similar experiences, generating similar ideas.

This lack of innovation inevitably leads to missed opportunities for growth and expansion, with studies consistently proving this to have a negative impact on a businesses’ bottom line.

+25%

Organizations in the top quartile for gender diversity have a +25% likelihood of financially outperforming their peers.

What’s more, an increasing number of organizations (especially government bodies) require their suppliers to prove their commitment to closing the gender pay gap.

3. Impact on consumer behavior

This lack of innovation inevitably leads to missed opportunities for growth and expansion, with studies consistently proving this to have a negative impact on a businesses’ bottom line.

4. Decreased employee morale and engagement

The knowledge of gender pay disparities can lead to lower morale and decreased engagement among employees, which can result in reduced productivity and higher turnover rates. This is a risk even for those who don’t need to publicize their poor gender pay gap, as a lack of fair and equal practices can still be felt and seen across the company.

Quote from What Women Want Survey participant: “[The new director] didn’t believe in the gender pay equity gap nor unconscious bias and, as a result of their strong personal opinions, it became difficult to want to work for someone so uneducated on matters that don’t personally impact them.”

5. Reputation damage

Companies with a reputation for gender pay inequity or a public gender pay gap are being increasingly called out and criticized. For example, in 2021 and 2022, an X account (formally Twitter) called the Gender Pay Gap Bot (@PayGapApp) was set up to automatically re-share the International Women’s Day (IWD) posts of UK brands — alongside the median hourly pay between men and women at that organization.

Failing to respond to such call-outs with adequate proof of commitment to progress can lead to brand boycotts and difficulty attracting top talent in the future. (28% of What Women Want Survey respondents said they research employers to find relevant news articles before applying for a role.)

Again, even those not required to publicize their data should beware, as a lack of diversity in representation is a clear indicator of the presence of a pay gap — and candidates are undoubtedly looking for such warning signs:

#5

Seeing women in leadership positions was ranked by What Women Want Survey respondents as the fifth (out of 15) most important offering from a new employer.

6. Legal risks and compliance issues

Ensuring pay equity is not only an ethical imperative but also a legal requirement in many places. Employers proven to practice gender pay discrimination (intentionally or not) may face lawsuits, fines, and damage to their reputation.

Your company can identify and address potential signs of discrimination early on by conducting an annual gender pay gap analysis.

Can companies really make a difference this year?

Yes. While your efforts won’t remove the gender pay gap overnight, these actions prove your commitment to progress — and the rewards for such efforts can be immediate.

55%

of respondents to the What Women Want Survey said they would still apply to a workplace with a poor gender pay gap if they could prove a commitment to closing it.

In fact, the employers we support and endorse in these efforts achieved a +7% increase in the overall number of women in their companies last year. For many (including those in traditionally male-dominated industries) this increase was as high as 12%.

Want to know how we can help you and your team do the same? Visit our how we can help page or book a call with your team today.

Talk to our team