How to close the gender pay gap in your business

- March 7, 2024 4 MIN READ

When the Workplace Gender Equality Agency (WGEA) published the gender pay gaps of companies with over a hundred employees for the first time, it was a historic day for Australian women. Nirit Peled-Muntz, Chief People Officer at HiBob shares why the data is so significant and how businesses can move to close the gap.

The premise of publishing the data is fairly simple—by identifying companies with a gender pay gap, those companies will have more incentive to address it. Overall, the WGEA data hasn’t revealed any major surprises on the gender pay gap (it’s still high at 22 per cent), but measuring this type of data is still a big step in the right direction to even out the field for equal pay.

To help tackle the very core of the gender pay gap, HiBob recently worked on a study on the contemporary challenges and opportunities women encounter in the workplace. Based on responses from 2,000 women and men in Australia in January 2024, the aim of the third Women in the Workplace report is to uncover how women are currently feeling in the workplace and how their attitudes and behaviours have changed since last year.

The findings have also shed light on what women will be looking to do if they find out their organisation has a gender pay gap, with over half of them (61 per cent) saying they would consider leaving their job if so. However, what’s surprising is that 36 per cent of men echoed the same sentiment as their female colleagues, signalling a growing solidarity on pay disparity.

With this in mind, modern organisations will need to prioritise resolving the pay gap issue not only because gender-diverse workplaces foster greater financial returns, but also to create an equal working environment where possible. So, here are three tips every modern business can do to ensure they’re doing as much as possible to get rid of the pay gap.

Create a safe space for pay gap discussions and feedback

If there’s little to no opportunity to discuss pay ranges in the workplace freely, employees are more likely to feel a sense of mistrust in their employer and this could lead to them believing they are getting paid less than their colleagues.

Recent findings from HireVue also attest to this as almost half of the surveyed Australians believe they’re earning less money than their counterparts in the same position. That sentiment all goes back to the lack of transparency within organisations, which is usually due to traditional workplace structures that are not designed for modern standards.

To make an inclusive working environment, modern organisations should build a clear pay philosophy, structure salary ranges accordingly, and hire and determine pay according to that philosophy. If once employees know and understand the philosophy, they still feel that they are not paid fairly, pave the way for a discussion so managers and HR professionals can explain their rationale.

Once organisations have this infrastructure set up, with managers and employees also trained to use these processes to their full potential, organisations are more likely to foster more trust and provide clear next steps should women find out they’re getting paid less for the same position as their male colleagues.

Conduct annual pay and promotion audits

HiBob’s survey noted that more than four in five (83 per cent) women think organisations should conduct annual pay equality audits while a further four in five (84 per cent) say organisations should conduct performance and promotion audits annually to ensure they’re being done fairly.

While annual audits are certainly a good idea, actually following through with those audits is difficult if the data you need lives in spreadsheets. Spreadsheets make it difficult to identify trends and discrepancies, and therefore don’t provide the level of insight a chief people officer needs to be able to make effective decisions.

Never before has modern HR technology been more important. It enables leadership teams to accurately assess pay and promotions, and measure the pay gap on an ongoing basis — even before or after any pay cycle. Armed with data that’s easy to act on, HR professionals will find it much easier to get a handle on the situation.

As 40 per cent of women believe that men are promoted more often or quicker than women within their company compared with 18 per cent of men who think the same, regular internal audits should also minimise this huge disconnect in perceptions between genders.

It’s important to remember most companies do not set out to create a pay gap but it’s something organisations need to prioritise fixing. Not only is pay equality fair, but it also helps improve profitability. Research by McKinsey says that companies with the highest levels of gender and ethnic diversity are 15 per cent and 35 per cent more likely, respectively, to have financial returns above their industry’s average.

Promote and support diversity in leadership

In the end, it all goes back to having the right role models for women to learn from and feel supported by in the workplace. Women have also confirmed this in HiBob’s report, where 84 per cent of them say organisations should promote and support diversity in leadership, with 79 per cent adding organisations should make diversity a core business value and foster an inclusive culture. Modern HR technology can help keep track of all of key diversity metrics and present that data to management teams whenever they need.

Building an environment for women to thrive also involves providing specific benefits to level the playing field. This includes offering family or carer’s leave, assistance with childcare, flexible working arrangements like hybrid work, gradual return to work, and, if needed, extra paid leave for women’s health issues.

Encouraging the use of these benefits is crucial. HiBob’s survey reveals the most commonly perceived women-specific benefits centre on family-type leave such as extended paid maternity leave (18 per cent), paternity leave/shared parental leave (18 per cent), and childcare assistance (10 v). This highlights the continuing burden placed on women outside of work and it is right for businesses to acknowledge in this way.

With so many opportunities to track and measure diversity and inclusion — by collecting data on gender, race, status and age; analysing hiring patterns and building more inclusive hiring funnels — modern companies now have a unique chance to ensure all their employees are treated with equal care and consideration. After all, they are a company’s most valuable asset — and employers stand to gain so much from serving them well.

Modern companies will also see major benefits from DE&I as they will likely see better productivity, innovation, creativity and reputation in return, resulting in stronger business results.

Want more? Get our newsletter delivered straight to your inbox! Follow Kochie’s Business Builders on FacebookTwitter, Instagram, and LinkedIn.

Now read this

Unpaid work the hidden enemy of economic equality

KBB Sales and Marketing Workshop