The Equal Pay Day, commemorated every year on 2nd April, is publicized by the National Committee on Pay Equity (NCPE) to draw attention to how far into the year women must work to earn what men earned in the previous year. Pay gap studies show that despite the efforts of politicians, activists and organizations such as NCPE to create awareness and establish gender pay equity, globally women are paid just 63% of what men earn. Women in India, for instance, earn 20% less than men. At the current rate of change, it is expected to take a staggering 202 years to close the gap. Alarmingly, the percentage of women in senior roles is also declining globally. Women held only 24% of senior roles across the world in 2018, increasing the pay divide further. A variety of factors, including gender bias, cultural norms, lack of equal rights at workplaces, and rigid societal norms have contributed to the prevalence of gender wage gap.
The impact of such gender pay gap statistics is significant – both on individuals and the organization, causing more and more businesses to explore ways to address the problem. Leading companies such as GM, Bank of America, and Johnson and Johnson are outlining and implementing strategies to close the gender pay gap within their organizations. Removing gender pay gap in your organization offers several advantages including:
- Increased productivity – Gender pay gap leads to lower workforce productivity. Reducing the gap by 10% can boost per capita output by as much as 3%.
- Larger pool of talent – An organization known for pay parity is likely to attract more talent and expand its pool of qualified candidates.
- Improved employee retention – Ensuring equal pay helps retain talented female employees by making them feel valued and rewarded, enabling organizations to stay competitive.
Closing the gap requires more than lip service and so it is important to delineate what organizations can do to address this issue.
Organizations should begin the process of bridging this gap by initiating and encouraging open discussions with employees at all levels. Transparency in pay policies is crucial to helping HR managers and leaders gain better insights into the factors contributing to the pay gap. Here are four other initiatives that can help you make significant headway in closing the gap:
implement fair pay practices
Research shows that women are less likely to negotiate their compensation offers and the ensuing income inequality follows them through their career. When hiring experienced women candidates, base your compensation offers on market standards and the candidate’s merit and caliber - not on the candidates’ last drawn salary. This helps address pay gap issues due to past discrimination.
correct pay scale differences amongst current employees
To quote Salesforce CEO Marc Benioff, “Every CEO needs to look at if they’re paying men and women the same. That is something that every single CEO can do today.” Salesforce analyzed its payroll and spent USD 3 million to close existing gender pay gap for all its employees. Take a page from Salesforce’s playbook and invest in studying your existing pay scales to identify pay inequities; then, take remedial steps to correct it over a period of time.
standardize performance reviews
Unconscious bias on the part of managers can affect performance reviews, promotions and bonus schemes. Studies show that women are more likely to receive critical feedback on personality traits such as confidence and assertiveness, which are perceived positively in men. Train managers with the twin objectives of eliminating prejudices in employee evaluation and establishing equitable performance reviews. Set up transparent and comprehensive 360-degree evaluation processes to mitigate bias and ensure neutral evaluation.
facilitate career growth of women professionals
Women often face an opportunity gap at the workplace, further contributing to the gender pay imbalance. By the age of 45, 59% of women are still in individual contributor positions as opposed to 43% of men, indicating disparity in the rate at which men and women move into senior positions. To counter this proactively, set a positive hiring ratio to ensure adequate female representation in senior management positions and male dominated sectors. GE, for example, has set a target to hire more women in STEM roles.
In addition to providing more opportunities to women professionals, it is imperative to support women dealing with major life events. This can be done by offering flexible work schedules, paid parental leaves, shared family care leave, extended maternity benefits and so on. For example, PWC allows its employees to take a four month leave of absence at a stretch for parental and related responsibilities, without affecting their performance ratings or career advancement opportunities. It must be noted that while such support for women is necessary, it is by no means sufficient for improving the career prospects of women. To attain this goal, it is essential to extend these benefits to male employees as well. If men are able to take child-care leaves, the burden of child-care won’t fall entirely on women and consequently, this will allow women to focus on their career to a greater degree.
Addressing the gender pay gap will do more than just provide women with the remuneration and recognition they deserve. It will also boost corporate and economic performance by an estimated US $160 trillion globally. In the 21st century workplace, gender pay parity is the key to empowering women, creating a healthier work environment and offering better work-life balance for all.