ESG Metric: Gender Pay equality
Ease of implementation: Medium
Suitable for: All businesses
Suggested functional lead: HR, D and I team
Summary
Improving transparency in progression, pay and reward can aid in reducing the gender pay gap. This can include radical transparency where all salaries are shared, or through a more approachable techniques where pay and rewards are clearly outlined throughout your organisation. To do so, the current pay, reward and progression must be reviewed to determine which areas need addressing. We also suggest speaking to your staff to identify which areas are unclear and lack transparency. Use the review of current statistics and employee feedback to prioritise which area to address first. Set new policies in place for the unclear areas and increase accountability to ensure management abides by it. Lastly, aim for external transparency and share best practices on how you are actively working to improve your gender pay gap.
Background Information
According to the UK Office for National Statistics the “median hourly pay for full time employees was 7.6% less for women than for men in April 2021”. When including part-time employees, the median pay was 15.4% less for women than for men that year. This means the median full-time women earn 87 cents for every dollar or euro a man earns. This pay gap gets even larger when considering annual income of men versus women because of unfair bonus systems. It is also affected by the larger proportion of women are in part-time roles with an untransparent and biased reward system. The concrete answer to the gender pay gap remains ambiguous for each sector, but increasing the importance of transparency in progression, pay and reward is a vital first step.
It is important not to assume transparency means revealing, for example, staff pay and rewards to the entire organisation. This is referred to as ‘radical transparency’, which some organisations do decide to do. In the case of this initiative, it will not describe radical transparency, however, outline transparency as being open and clear about the pay and reward decisions made. If transparency is low, women are less likely to have access to sponsors and senior leadership who can support their career progression and be held accountable for injustice. Without transparency, bias is more likely to influence decision-making, disadvantaging both women and other under-represented groups.
Implementation Steps
Review process for pay, reward, progression and promotions
Review which processes are clear and identify which are transparent. For example, you may find that the pay for certain departments is more transparent than others, whilst bonuses are transparent throughout. Collaborate with HR to review HR promotion processes, salary reviews and bonusses. Also review non-HR processes such as allocation of high-profile assignments and development opportunities.
Consult a wide range of employees
Speak to your staff, directly or through anonymous surveys, to identify what is unclear regarding pay, reward, progression and promotions. Identify which areas are lacking in transparency according to your staff and use employee feedback to prioritise which processes should be addressed first. This may, for example, include clear eligibility criteria for promotions in certain roles or bonuses.
Create a new policy where criteria and processes are clear
Ensure you collaborate with a diverse team to create new eligibility criteria and decision-making policies. If the reasoning for a promotion is transparent, but the eligibility criteria they must meet to be promoted is not, you will still face the same issues furthering the gender pay gap. For performance reviews, be specific and clear about progression criteria, what is expected of them and how their work related to pay. Note that it is important to avoid using self-assessment as they can increase potential bias of managerial decision-making with a decrease in promotion for women.
Examples of clear policies include:
Clear and visible salary ranges when advertising for a job and making it non negotiable
Making what is negotiable transparent
Increasing visibility of internal transfers and promotions, including the relevant criteria and decision-making process behind them
See EKC Group Gender Pay Policy.
Increase accountability
Transparency correlates to accountability as the managers’ decision-making is being made public, either internal or external to the organisation. It is important to monitor the transparency as it leads to continued accountability. Similarly, allow staff to continuously ask questions regarding transparency for continual improvement. Hold managers accountable if they have ar not being transparent or have unequal teams. This can be done through regular feedback on the managers’ performance or relating the teams’ pay equality to the managers’ rewards.
Aim for external transparency
Consider publishing gender pay policies and the organisation’s statistics. Share how processes were made clearer and more transparent for other organisations to learn from and adopt.