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17 Oct 2023
by Ruth Thomas

Closing gender pay gaps – 3 things you can do right now

Lack of progress in closing gender pay gaps is frustrating, but there are steps HR professionals can take

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Today in the UK, men are paid more than women, on average, in 79.5% of companies, compared with 77.2% in 2017, according to an FT analysis.  Over the same period, the average pay gap has also widened slightly: men’s median hourly pay is 12.2% more than that of women, compared with 11.9% in 2017.

Gender pay gaps are a measurable indicator of inequality between women and men. The gender pay gap does not measure equal pay (comparing individuals performing substantially similar work) but is a broader measure of the difference in the average earnings of men and women across an organisation, a business sector, an entire industry, or the economy as a whole.

Six years of regulatory reporting in the UK has not proved to be effective. This is principally because the legislation requires employers to measure and report pay gaps rather than take action to address root causes.

The solutions to gender pay gaps are complex and require a commitment to addressing issues such as occupational and vertical segregation, making jobs more flexible and ensuring that talent processes such as hiring, promotion and performance assessment are fair.

It’s clear many organisations have failed to embrace these challenges. If this is frustrating you, as a reward or HR practitioner, there are some strategies that you can deploy that can have demonstrable and immediate impact.

1. Ensure fairness is part of each pay decision

You may achieve pay equity after your pay equity analysis or annual compensation review is complete, but workforces are dynamic, with many day-to-day employee activities that create opportunities for pay inequities to creep back in.

To ensure a sustainable approach to pay equity, you need to know if your compensation and talent policies are working the way they’re supposed to — or if they are contributing to salary discrepancies. It could be said that remediating pay equity addresses only the symptoms and not the causes.

Ultimately, the aim should be to achieve pay equality where everyone in an organisation has the same opportunity to earn the same.

There are many data metrics that you can collect to identify operational gaps and any unintended biases that may affect pay decisions. For example, capturing data on the protected category breakdown of job applicants can indicate whether job descriptions attract only certain candidates, or whether recruitment strategies fail to target all eligible employees.

Data on pay progression and average pay awards can yield surprising results, which may indicate where unconscious bias is occurring.

2. Consider how you will use market data

Many organisations use market data either to determine pay directly or to create pay ranges. The issue with market data, however, is that it reflects the market as it is. This means that it includes the biases in wider society and in the organisations that pay data comes from. The main biases are related to occupational segregation. Female-dominated roles, for example, have historically been paid at a lower rate than male-dominated roles.

One way to remediate this is to create pay ranges for each job or career level. As market data for all roles at that level are combined, any gendered differences between roles within the level are removed or smoothed. If there is an even gender balance across the salary range, then this should remove some ‘equal pay for equal work’ concerns.

If your organisation is not ready for job-based pay ranges, at a minimum you should analyse for gendered roles during benchmarking exercises. This involves determining whether each job class is predominantly male, predominantly female or gender neutral and compare the compensation between predominantly female and male job classes doing work of equal or comparable value.

As organisations become more equitable, market data will reflect decreasing occupational segregation biases — but it will take time.

3. Fair pay at hire, standardise salary structures

The talent acquisition process is a key touchpoint in the employee lifecycle. It’s the point at which an employee’s salary history with your organisation begins and when you can set the wage bar for the rest of their career, perpetuating any initial inequity. It is also the point at which you can import pay equity issues.

Emerging pay transparency legislation aims to tackle this. Sharing pay range data can prevent negotiation which disadvantages some employees, but beyond this it facilitates understanding about pay within the organisation. The easiest way to address this is to thoroughly review your compensation philosophy and implement standardised salary structures.

These actions alone will not close pay gaps, but ensuring pay practices are fair is an important part of the solution and something you can directly affect. Addressing pay equity is a matter of integrity. It’s about being authentic when you say your employees are your greatest asset by treating them with fairness.

Being transparent and demonstrating that your organisation’s approach to pay is fair and equitable shows your employees that you value them.

Download Payscale’s pay equity handbook for an in-depth look at a proven method of pay equity analysis. It has everything you need to know to perform effective pay equity audits, interpret results, and take action to resolve pay gaps.

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