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The Bigger Picture for Addressing the Gender Pay Gap

It was heartening to see that the Dutch women’s football team received a pay rise ahead of the UEFA Women’s Euro 2022, a move that brings them closer to pay equity with the men’s team. At the championships they will be in good company with other teams that have also sought to redress the gender pay gap, either through paying the men and the women the same, or at least matching their bonuses and image rights.

It is certainly a step in the right direction, and a symbolic move that is needed in a world where gender disparities still exist. According to World Economic Forum’s Global Gender Gap Report 2021, women globally earn around 37% less than men in similar roles.

In this context, it is important for organisations to have the right processes to identify and correct imbalances. Addressing pay disparities is much easier in football, however, because the positions are exactly the same for the men and the women. You can easily compare like for like – or apples with apples.

For large organisations, the situation is much more complex, and many may not realise they have a gender pay problem. When asked to look at the pay gap, most companies will attempt to compare apples with apples. But this approach can be misleading. Companies need a bigger concept, and a bigger picture to assess whether they have a pay gap.

When companies calculate their gender pay gap, it can seem really simple. And on paper it can look like there is no gap at all. This is what we have experienced with clients who have asked us to do such an analysis. At first, we created groups of comparable roles and used advanced elegant mathematical techniques. A number of factors affected pay, including employee grade, location, performance score and business function. But gender had an insignificant score. Or, in other words, from a mathematical point of view, there was no gender pay gap.

We sensed there was more going on so we started to reframe the gender pay gap as a series of career events, and managerial decisions, that can take place over a person’s career. Over time, these actions can have a significant impact on pay, but in an apple-to-apple comparison they won’t show up.

Let me illustrate with an example. Two graduates join a company, and everything about them is the same – age, qualifications, location, role etc – except that one is male and one is female. Let’s call them Bob and Betty. They joined the company in 2019 and they have the same starting salary because they are the same grade.

Over time, their experiences start to diverge. Bob is more vocal – perhaps he’s more confident or extroverted – and he gets noticed. This leads him to being offered more opportunities to demonstrate his abilities, and by 2020 he has a higher salary because of his additional responsibilities. Technically, there is no gender pay gap in this scenario because the pay is based on performance. The situation continues, and Bob is not afraid to blow his own trumpet – telling his peers and superiors how capable he is – and the company’s talent radar picks him up and he starts to be included in the company’s succession plans.

By 2021, Bob gets promoted to the next grade and also gets included in the company’s bonus pool. Meanwhile, Betty is still at the grade she started on, and now there is a big difference in their salaries. But according to the gender pay gap analysis there is no difference; they are on different grades, and their salaries match their positions.

We need to move away from like-for-like comparisons with gender pay gap analysis and look instead at the bigger picture. There are many metrics that can be used to assess equity and identify and correct any imbalances. We have a measurement framework with 30 metrics, which cover recruitment, performance and potential, development, presence and pay.

Before starting any analysis, there are some questions you can ask:

  • Is there a simple gender pay gap? Before starting any regressions or modelling, first explore the simple gender pay gap by comparing the full-time base pay for men and women.
  • Are you recruiting in leadership positions? What is the percentage of female hires for leadership positions compared to the current workforce?
  • How are your recruitment channels performing? Are some channels more likely to attract women?
  • How might this impact your channel strategy?
  • How do absenteeism and sick leave compare? How does the impact of sick leave differ by gender? What is the data implicitly telling you?
  • How does attrition compare? Are you losing more women to voluntary turnover? If so, why?  
  • Does your company have an inclusive succession culture? Are women really part of the short-term plans, or only in the long-term?

Of course, it’s not just gender that is an issue when it comes to diversity, inclusion, equity and belonging. With the analysis, any group can be compared with the same metrics to identify if there’s a gap. The first step in doing this though, is not to compare apples with apples, but instead consider the bigger picture.

Written by

Dirk Jonker

Founder & CEO