The Office of National Statistics 2019 report on the UK’s gender pay gap found that the gap amongst full-time employees has actually increased to 8.9% (up 0.3% from last year), with full-time female employees continuing to be paid less than their male counterparts. And while there is a downtrend on the grander scheme, it moves at a glacial pace – since 2012, the gender pay gap has only decreased by 0.6%.

This data does not paint the full picture though. UK companies with upwards of 250 employees are required to provide an annual gender pay report, but sadly most companies are still missing the granular data they need to accurately report, plus a number of loopholes can also mask the real situation as well.

Additionally, there is no requirement to report on the pay of contingent workers, and contractors at some organisations make up over 50% of the workforce. According to the New York Times report in May Google employed 121,000 contract employees and 102,000 full-time employees. With these additional numbers included, the situation could be much, much worse. 

Nevertheless, all organisations have a duty to reduce the pay gap which can start with these proven steps:

1# Consolidate your Data

The lack of access to accurate figures in large organisations is caused by reward data – salaries, incentives, pensions, benefits and shares, being scattered across many disconnected systems. On top of this, finance and HR collect and summate the data by different rules for different purposes thus making it difficult for organisations to truly understand their workforce figures.

Some organisations, very few, can aggregate this data to generate valuable insights into the real pay gap within an organisation (amongst other things) – providing a clear breakdown on figures allows businesses to develop a data-driven strategy to remedy discrepancies in salaries. 

Salesforce recently detailed the analysis of over 17,000 salaries within their organisation that revealed 6% of its employees, mostly women were in need of a salary readjustment. Over the coming years, the company spent an estimated $8.7m in order to rebalance pay schemes based on race, gender and ethnicity, and it is now widely acclaimed for closing its wage gap.

“With just the push of one button,” Marc Benioff, the CEO of Salesforce, told CNN in an interview. “Every CEO in the world can know exactly what is their pay discrepancy between men and women, and I hope that every CEO pushes that button.”  
Unilever has also made a huge investment in developing a digital reward system that allows HR, finance and business managers instant access to all of reward data for every one of its 165,000 employees. With this system Unilever has complete power over its Pay Equity analysis.  

2# Decide on a Salary Negotiation Strategy

The practice of negotiating salaries has been labelled as a contributing factor to the pay gap. For example, women are generally less likely to negotiate for salaries, and  when they do, they tend to receive a more negative reaction than men attempting to do the same.

There are two proposed strategies for remedying this within your organisation, the first is to implement a ‘no-negotiations’ policy within the organisation, where a salary is offered ‘as is’, irrespective of gender. The second is to actually encourage negotiation, whereby the company provides the candidate with salary ranges for the specific role they’re applying for, and urges them to discuss. 

Many firms and programs now exist explicitly to teach women to more efficiently negotiate for their desired salary. And, gender could be the tip of the iceberg. Who would bet against a similar reluctance to press their position amongst other identity groups? What’s more, a growing number of US states are enacting legislation to ban recruiters from demanding pay history, allowing candidates to go through the hiring process without any employer preconceptions.

3# Skill-Based Performance 

In an ideal world, the criteria for rewarding individuals would be based solely on skillset and performance. Talent pools may usher in rewards based on skills, as their strength lies in the provision of a diverse and highly-available repository of talent, constantly seeking out workers with a range of different skill sets.

This model takes a different approach to the rigid reward structures we see in some organisations today, and produces a more autonomous workforce – one that thrives on flexible hours and remote work. This allows workers to achieve a better work/life balance, without being impeded by a traditional organisational hierarchy – which is a contributing factor to gender inequality.

4# Reframing Accountability

Understanding the frameworks used to establish equal, or equitable, pay goes a long way in devising long-term strategies for closing the gap. A recent study published in Gender & Society found that gender equality initiatives (unconscious bias training and mentorship programs) in the tech sector often missed the mark by placing blame for inequality on male and female workers – when in reality, it is the organisation that must be held accountable.

The paper suggests that the most effective methods to reduce inequality on this front are broadening recruitment strategies (hiring outside of the traditional channels), developing clear and measurable criteria for evaluating performance, and relying on a transparent model to assess pay and compensation.

At present, companies have to submit nine metrics to the government website on gender pay reporting. By having internal access to the reward data in real time, they can review it regularly, and hold people to account for gaps, assess where improvements had been made, correct anomalies and improve working practices going forward. In fact at Unilever, the digital reward system can respond to trigger events such as hiring, and present recruiters and managers with the current state gender pay ratios for positions down to the most detailed level; within a geography, department, grade and job. This opens up the potential for using behavioural economics, “nudging” to influence decision makers. It uses reward data to pose the challenge; will your action make this better or worse? 

5# Take Succession Planning Seriously

What is more persuasive than ROI? McKinsey & Company’s 2018 Delivering Through Diversity report established a strong link between an organisation’s diversity, and its profitability when compared to competitors. Those in the top-quartile for gender diversity at the executive level were 21% more likely to outperform on profitability, and 27% more likely to have superior value creation. Cultural, ethnic, sexual orientation and age diversity are equally important in this regard.
If talent is normally distributed across gender, you would expect remuneration to reflect the same distribution. If it does not, your organisation is undervaluing some talent and overvaluing others. That’s a poor use of human capital. This logic shouldn’t be confined to gender either. 

If we can learn to act without bias using data to fix our errors and shake off assumptions, we can make better business decisions based on considered interpretation of the facts.

There is a considerable amount of work that must be done to close the gender pay gap – all of which begins within individual organisations. Increasingly sophisticated technologies allow in-depth insights into employee demographics, behaviours and remuneration, as well as simple methods by which to sort and analyse workforce data. Armed with these, the businesses of today can correct their inherent biases, thus ensuring greater diversity and closing their pay gap once and for all.  And, it does not stop at gender. The next wave, which is long overdue, will be chasing down the other factors that will make Pay Equity reporting a major activity for HR, with ethnicity, socio-economic background, religion and others waiting in the queue. All organisations will need that button that instantly reports on any ratio that deviates outside of normal distribution. Not because they want to satisfy regulators, but because it optimises performance and proves they are responsible players in wider society. 

About the Author
Ken Charman is CEO of uFlexReward - an enterprise software spinout company that originated in Unilever, where he headed up the project to build a unique, real-time total rewards system from the ground up.