Best practice in closing the gender pay gap

What is best practice when it comes to closing the gender pay gap?

It is a valid question and the longer we look at the data for the Financy Women’s Index, the more we are convinced that it’s a mix of having more women in leadership positions, clear polices, measurement, accountability, and a radical shakeup of the gender dynamics across key industries, which are critical to helping organisations solve the problem.

Being able to report a positive story when it comes to the gender pay gap was a key consideration in the formation of the latest 2021 Forbes list of the best employers for women.The top performers, which included Fidelity Investments who’s CEO is Abigail Johnson and Foot Locker, were able to show a higher or balance representation of women in leadership positions and the presence and uptake of workplace benefits such as flexible work arrangements.

Research also shows that when it comes to an organisation improving their gender pay gap performance, there are some common areas which support progress.

Measurement

According to the report, Gender Pay Gap Reporting in Australia: Time for an upgrade published by the Global Institute for Women’s Leadership, Australian National University and King’s College London in October 2021, large Australian are getting increasingly better at tracking and reporting their gender dynamics to the Workplace Gender Equality Agency (WGEA).

But where things could be better is around the absence of qualitative data or action plans which delve into what is being done to improve outcomes.

Indeed, the report suggests publishing organisation level pay gap data would bring Australia in line with other countries, like the UK, and allow for market forces and increased stakeholder scrutiny and pressure to improve the situation.

Accountability

What is a goal without accountability? Right now, the desire to be seen as green or pink from a social impact point of view is making some organisations cheat when it comes to things like improving the gender pay gap.

What is needed is greater accountability from the top to the bottom. We need to see that organisations can not only demonstrate that they have an effective policy but that any actions to support that policy includes accountability. For instance, if the organisation is committed to closing the gender pay gap across its organisation but is unable to achieve that under the current operations of the business, then perhaps it needs to identify and move to implement changes that deliver real outcomes. Consider a construction company which is unable to attract enough women to its higher paying management roles due to a talent shortage. This company may need to implement an action to actively employ more female to train into these roles, or even analyse the value of work across female and male dominated roles with a view to changing occupational gender stereotypes.

Penalties or rewards for behaviour

Whilst reporting to WGEA is currently mandatory for companies with over 100 employees, it is basically a slap on the wrist in terms of the penalty to those who fail to do so.  It would be good to see industry develop standards that reward and celebrate those organisations which are leaders on social impact initiatives such as closing the gender pay gap.

Thinking about intersectionality

There was a point made in the above report around intersectionality because Australia does not currently consider how additional measures of disadvantage, such as Indigeneity, social class, disability or culturally diverse backgrounds, factor into the pay gap. This is an issue we encounter with the gender pay gap data collected for inclusion in the Financy Women’s Index. There is simply not enough of this data available to feature but it is so important that it is captured. Organisations can play a powerful role in the collection of this data and can use it to better understand and address financial inequalities.