It was with some trepidation that I read a recent LinkedIn post outlining three easy steps to address gender equity. If that reminds you of a Facebook post claiming three easy steps to permanent weight loss, or, “millionaire shares easy secret to their success,” you are not alone. Gender equity is at its core a simple enough concept; however, it is surprisingly difficult to measure, let alone fix. The complexity of the issue is highlighted by the differing approaches used by regulatory bodies to address gender equity through reporting; for example, the UK requires the reporting of simple average and median pay and bonus levels, while our cousins in Australia require much more segmented reporting.
From my experience the gender pay gap arises from two key issues, if you are lucky. Firstly, the representation of women in senior positions, and secondly the difference in pay for doing the same or similar work at the same level. If you are unlucky, you could well be faced with gender differences that are global and societal, such as the lack of women in high paying professions like institutional and investment banking, specialist engineering in the mining, oil and gas industries, and jet pilots to name but a few. However, in the section below I have outlined the approaches that have successfully been used to address differences in pay arising between roles of similar complexity within organisations.
The first place to start is by ensuring your remuneration philosophy is fit for purpose. A remuneration philosophy is a set of statements that outlines what is important to your organisation in the way it pays, and what it is willing to pay for. These are key to guiding the development of remuneration policy, determining how you will measure the ROI of your remuneration spend, and in communicating your remuneration policy and remuneration decisions to managers and employees.
If you don’t have a philosophy in place, your remuneration practice is in danger of being driven by tactical demands, rather than being the basis of sound, consistent, long term decisions. The measurement of the success of your remuneration decisions is also likely to be tactical, meaning that taking a long term sustained approach to addressing equality is all but impossible.
If your remuneration philosophy does not specifically mention equity and fairness, any attempt to address gender pay gaps may be well down the priority list when it comes to governance decisions and the allocation of remuneration budgets.
The development of a philosophy that is aligned to your unique organisational situation is a complex project in its own right, requiring high levels of consultation with your Board and Executive team. My recommendation would be to lean on external advisors to help you through this process, utilising all their experience and intellectual property to obtain a result that is truly fit for purpose.
While on the subject of governance, one of the key pillars to addressing either pay equity, or representation of women in senior roles, is to ensure you have appropriate governance structures in place. Depending on your organisation, this may start at the board level, but at a minimum should include a steering committee made up of members of your senior management team who are focused on supporting and measuring the delivery and effectiveness of approaches and policy changes.
No remuneration project is complete without a good set of data. There are plenty of tools to get you on your way, including the gender tool developed by Strategic Pay for the members of the New Zealand Remuneration Network.
However, I would encourage you to look beyond a point in time analysis and consider examining changes over a time series. For example, you could take a population over five years and examine the gender breakdown in terms of attraction, retention, promotion, and of course salary changes. This will begin to provide significant insight into what you need to change/where you need to invest to address any systemic issues.
Application of market data
If your organisation follows market pricing, or has developed different ranges for every job family, you are likely to be replicating any bias that present in the market into your organisation: If the HR job family is paid less than others of the same complexity due to its gender makeup, you may end up institutionalising gender bias if you follow the market.
While it may be old fashioned, the development and communication of a sound grade model is one of your best tools to identify and address any form of inequity.
There are many policy decisions that will impact your ability to manage equity on an ongoing basis; issues such as the treatment of employees on parental leave during salary reviews, provision of KiwiSaver to those on parental leave, access to flexible working options, and the list goes on. In my experience the only way to address the issues impacting gender pay, is to identify the pain points one by one and step through your policy options over an extended period – but don’t forget to watch out for unintended consequences!
Your policy decisions around the inputs to remuneration decision making are also vital. If, like some organisations, you choose to drop performance ratings, you will be losing one of the key tools that can be used to objectively measure the inputs to remuneration decisions. By taking away a formal and auditable process, you are leaving managers with little choice but to replace it with something else, potentially their own biases and subjective points of view.
While the above is non exhaustive, it will provide you with a sound basis to start the equity journey. In addition, you will need to work closely with your Organisation Development team (if you are lucky enough to have one) to identify and overcome the roadblocks to equal representation from the board down. That’s another subject for another day, and a tough journey in its own right.