The business case for increasing diversity, including gender diversity, is now well established: companies with greater female representation perform better. But there’s another way to look at this issue. In the words of Male Champions for Change having an equal representation of women in the workforce is simply “the right thing to do.”
More and more organisations are taking this values-based approach to diversity and inclusion, rejecting the entrenched unfairness of a system that favours men over women. But still the pay gap lingers. This is because gender inequality in the workplace can’t be fixed with a bandaid solution – a quick pay rise here and there. The gender pay gap exposes age-old structural deficiencies that organisations must now address holistically to build a new, fair foundation for all employees.
More than just a pay gap
Public discussion of gender pay tends to treat the issue as a single topic. In reality, there are two separate issues at play here. One is equal pay for equal work: the extent to which women are paid less than men for doing the same job. The other is the gender pay gap: the difference between the aggregate average pay for women and men across an organisation.
The first issue is the most obvious and, arguably, the easier one to fix. The second presents organisations with a more complex challenge. While differences in average pay may be due in part to equal pay for equal work issues, they’re more typically a product of female underrepresentation in higher-paid industries and functions, and in leadership roles.
Underrepresentation doesn’t come from nowhere, it’s a symptom of deeper talent acquisition and talent management problems. It’s why taking a reward-focused approach won’t fix gender pay gap issues, the solution requires a more holistic approach.
Leaning in to the headwinds
To address gender inequality effectively, we have to look at male and female distributions across the workforce and ask why women are less likely to be found in higher paying industries, functions and roles. Our latest study identifies seven headwinds that commonly hold women back:
- It’s easy to stick to what you know, including in recruitment, where people tend to gravitate towards others who look and act the same as they do. These traditions are led from the top, so if the leadership team is overwhelmingly male, then this preference will trickle down.
- Women lack reference groups – in a male dominated environment it can be difficult to identify networks or sponsors who could help them progress.
- Cultural norms often still favour masculine leadership styles and behaviours. Women with these behaviours are often seen as demanding or aggressive.
- We also see a level of pushback – the focus on diversity has led some to believe the pendulum has swung too far in the other direction.
- Often we make assumptions about what women want and don’t want from their careers, without actually understanding their goals.
- While overt bias is now unusual, unconscious bias remains and is harder to deal with.
- The last headwind is the internal debate women often engage in. Women can doubt their fitness for leadership because they don’t see others like them in senior roles and it can be hard to take on the role of trailblazer.
These headwinds still blow strongly in New Zealand and Australia, particularly in listed companies. In New Zealand, there is just one woman CEO in the NZX 50. In Australia, there are only 14 women CEOs leading ASX 200 companies. More tellingly, representation in line roles (often seen as the feeder roles for the CEO) remains low: just 12% of ASX 200 line roles are held by women, compared with 34% of function roles.
Using analytics to close the gap
We know that unequal representation in well-paid roles is a big and complex issue and while there is no silver bullet there are actions that you can take to start moving the dial simply by looking at the data you may have available:
- Conduct Pay audit, looking not only at the average gap, but also “like for like” gaps, as well as representation.
- Review your (anonymized) performance rating reviews. Are e.g. more strong words/ judgements appearing in women performance review than man (e.g. abrasive, aggressive etc.?). How does that impact salary increases, bonuses or promotion possibilities? More advanced tools for people analytics can be helpful here.
- Review how you build a pipeline of candidates e.g. does that includes self – application? It has been researched that women are much stricter in evaluating own competencies and fit for the role, so there might be less capable women applying for internal roles and development programs then men with same or lower level of competencies.
- Review data coming from your engagement survey – comparing how questions about fairness and inclusion, performance management etc. are answered by male and female part of your employee population? Where are biggest gaps and where they come from?
Our new report, The Real Pay Gap, provides further insights into this important issue and steps that organisations, line managers and individuals can take to improve female representation in the workforce.