Ignore your gender pay gap at your peril

The gender pay gap was highlighted over 100 years ago, yet for most organisations it sits invisible and unknown. Then high profile organisations such as the BBC and RTE release figures and it becomes a headline grabbing controversy for a short period. This time it has forced the government to take action to set up a consultation process on how to narrow it.

The gender pay gap was covered in the recently published National Women’s Strategy for Women and Girls, 2017–2020, a document that is strong on aspiration addressing a wide range of equality needs. The strategy would however benefit from robust measures, and a greater sense of urgency as many of the actions are positioned in a four-year time frame. This includes action to narrow the gender pay gap.

With Eurostat statistics showing a gender pay gap for Ireland at 13.9% in 2014, compared to an EU average of 16.7%, this is an equality issue. According to the World Economic Forum in 2016, it will take an incredible 170 years to close the world’s gender pay gap at current rates of progress. This reflects both the lower participation levels of women in the labour market, and the differences in pay in work, and is despite the fact that women at least equal men in educational attainment in 95 countries.

But it is also a major talent issue, one that needs stronger action to be taken within organisations. How often do we consider general pay rates when we discuss flexibility and leave options with parents (mainly mothers), or think of equality when we look at salary increases and bonus distribution? Or when we consider the organisation’s employer brand. As the practice of annual gender pay gap reporting takes hold in the UK (legally required since April 2017 for those employing 250 or more), this will publically reveal good employers, and the laggards!

As the labour market in Ireland tightens, employer branding is moving centre stage, and the CIPD HR practices in Ireland 2017 report showed 46% of employers were investing in their employer brand to grow their talent pipeline. Attracting and retaining both male and female talent is getting more competitive and will get more difficult for organisations who cannot demonstrate that their reward practices are founded on equality and integrity.

Transparency

It is recognised that transparency will go a long way to closing the gap and exposure of discrepancies will create pressure for change. Therefore, according to the World Economic Forum, 2015, here are five key findings that you should know.

1. The gender pay gap increases with age. The gap is generally lowest when starting out, where pay rates are low, and divergence increases from 25 to 34 years (see Eurostat).
2. When workers are unionised, the gender pay gap shrinks, according to US data.
3. Women expect to earn less than men. Research by Glassdoor found women’s expectation of pay increases were lower than men’s. Research at Columbia University put this expectation gap down to two factors: overconfidence and competitiveness, more visible in men. It may also explain the difference in real earnings as individuals with low earnings expectations are more willing to accept a low-paying job and are also less likely to negotiate for a higher salary since the offer is consistent with their internal benchmark.
4. Women pay a ‘motherhood penalty’ – while men get a ‘fatherhood bonus’.
   
   
5. It could be the next century before we achieve gender parity in the workplace.

Who is responsible and what can HR fix?

Here are three ways in which you can build transparency and examine the issue in your organisation.

1. Determine who is responsible – this question is central to starting to examine the issue. Step one is for a senior person within the organisation to take responsibility for the gender pay gap and for overseeing interventions to diagnose and address any gaps. Too often the responsibility floats. It may be the HR director, but not necessarily so, however it is often not called out in lists of responsibilities. Then it needs to be translated into accountabilities and KPIs for all relevant senior roles across the organisation.
2. Implement a proper valid pay audit to determine the extent of your gender pay gap and where it exists in the organisation in term of roles, levels, skills, etc. Examine how recent appointments and performance rating, pay increases/ bonuses have benefited one gender over the other. This is a technical piece of work with greater complexity than a simple wage survey.
3. Support transparency in pay and compensation. This is not an easy win where forces to blur pay levels and differences are active, you can start with publishing the parameters for setting pay levels, the criteria and formula used to determine pay and merit increases and bonuses. Examining the equity of benefits and where and why anomalies lie will also help.

In practice

Research from the higher education sector in the UK presented five ideas on how employers tackle the gender pay gap, according to Hayfa Mohdzaini, lead researcher for the 2015 Gender Pay Gap Working Group Report:

1. Balance gender at all levels: Reducing the gender pay gap is often discussed in terms of increasing the number of women at the top. But it is also about having more men at the bottom. One way to reduce the gender pay gap is to achieve a more even distribution of the number of men and women across the pay scale. is valued in your organisation, and see if you need to reorient it to better recognise women’s contribution.
2. Don’t pay over the odds for talent: Because you could accidentally create a large gender pay gap and increase market salaries, both of which are costly. is valued in your organisation, and see if you need to reorient it to better recognise women’s contribution.
3. Set targets to plug the leaky talent pipeline: While there is often discussion about the number of females in senior and board levels, there should in fact be targets set throughout the organisation, and then translated into actionable KPIs which managers are accountable for. is valued in your organisation, and see if you need to reorient it to better recognise women’s contribution.
4. Change how work is valued: In higher education, research contribution has traditionally been the primary consideration for becoming a professor. This practice disproportionately benefited men, leading to fewer female professors, according to the UK research. Consider what is valued in your organisation, and see if you need to reorient it to better recognise women’s contribution.
5. Get buy-in from all levels: Good policies become good practices when employees are aware of the help available and line managers are supportive in making it happen.