Did you know that you may already have a tool in place to help you compare apples to apples when it comes to pay?
The gender pay gap debate continues to attract a lot of media attention. For some time, there has been a growing concern that women are being paid less than their male co-workers for doing the same work. Unfortunately, a lot of the debate is driven by sensational headlines and very little real understanding of what the gap really is or how it should be measured in order to actually resolve the problem. For example, the Australian media love to quote the 25 per cent gender pay gap that was published by the Workplace Gender Equality Agency (WGEA) in November 2014. Yet, when we undertake analyses of our Australian and New Zealand databases of over 390,000 jobs, we get a number closer to 5 per cent.
So how big is the actual pay gap, and how can businesses ensure they are paying their employees fairly, regardless of gender?
Comparing apples with apples
We believe the solution begins with accurately comparing pay data for similar jobs. Neither dataset above is wrong, they are however measuring different gaps. The WGEA measures the overall gap based on reporting by a broad category, for example senior management. Hay Group’s measure is based on a deeper cutting and slicing to ensure that jobs of similar sizes are compared to each other. For example, in senior management ranks, Hay Group’s work measurement approach identifies 15 different job sizes in this one broad category.
Traditionally used to benchmark pay, work measurement can actually help organisations ensure they are complying with gender equity standards and reap the multitude of benefits from having a gender diverse workforce. Hay Group’s job evaluation method measures all jobs, from factory workers and clerical administrative jobs to CEOs, using the same standard sets of factors, resulting in the ability to compare apples to apples. It helps you understand and obtain deeper insights into the pay gap between men and women in your organisation. What is more significant is that it also allows you to see the prevalence of men and women in certain roles, highlighting the real issue in gender pay equity.
Highlighting a bigger issue
It is well known that men hold more of the bigger jobs than women. Given that people are paid more for bigger jobs (there always has been and always will be a clear correlation between job size and pay) this means that in the senior management category, overall men earn more than women. We find that this effect is exacerbated throughout the various job size levels, with more prevalence of women in supportive, administrative and clerical roles, which are also the smaller and lower paying roles. This means that even by ensuring women and men are paid equally for the same work (as measured in terms of job size) it won’t resolve the overall pay gap given that men are more prevalent in bigger (and therefore higher paying) jobs – the overall gap will still remain.
However, if you don’t measure the gap in your organisation through a formal work measurement approach such Hay Group’s job evaluation method, you really won’t understand whether you have real pay equity problems; and without identification of the real problem you will be hard placed to undertake remedial action.
Work measurement in action
We have worked with organisations who already report to the WGEA on gender pay equity, but who also want to understand the deeper issues, specifically the extent of their own pay equity and gender balance problem, in more depth. By using Hay Group’s job sizing methodology as the tool for undertaking comparisons, we have been able to provide deeper insights and analyses that facilitate understanding of where the problems lie and allow for appropriate action planning.
The data below shows a summary table of how our analysis can help by comparing pay by job size rather than by overall management category. In the example organisation, there are 5 different senior manager grades, with most of them being filled by men. As expected the higher grades pay more resulting in men being paid on average $288,889 across the senior manager cadre, and women earn a lot less at only $205,000 on average, with the overall average being skewed due to the male average, at $280,500. Yet when undertaking an apples-to-apples comparison and looking only at men and women in the grade 20 jobs, women do in fact earn more than their male counterparts.
So, in this example, whilst the overall statement that women earn less in senior management than men is true at face value, overall it hides the real problem, being that there are no women in the higher grades. Without undertaking the detailed job sizing analyses organisations could very easily lose focus on the wider problem of women not being employed in senior roles.
In order to close the gender pay gap, organisations need to increase female participation in these bigger jobs. Here are a few key steps organisations can take towards gender pay parity:
- Use work measurement to identify the real gaps in pay and the roles where gender prevalence exists.
- Remove unconscious bias in recruiting and promotion systems.
- Remove bias from training and development programs.
- Ensure flexible work is available to both men and women.
- Provide better mentoring programs for high potential women.
- Provide job rotation opportunities for high potential women to broaden skill sets, particularly in non-traditional functions such as engineering, supply chain and technology.
In reality, closing the gender pay gap requires more than just organisations changing their business practices – it is a much wider cultural issue of changing gender stereotypes and encouraging women to pursue education (and consequently jobs) in male-dominated sectors that attract higher salaries. Businesses and society needs to work together to tackle this issue, but organisations need to make that first step of highlighting that there is an issue. By using an approach like work measurement that may already exist within your organisation, you can make that first step towards making gender parity in your organisation a reality.
For more on the gender pay gap debate, read my article Cultural norms: The real antiheroes in gender pay gap
For the majority of our clients, work measurement and reward go hand in hand. In fact for some organisations, it has only ever been used for this purpose – assigning a level of pay to a role.
The reality is that work measurement is far more powerful: it provides our clients with a great foundation for talent management, career-pathing, succession planning, and organisation design, and helps to answer questions around the fit between the role and the individual.