The gender pay gap is confusing. The words used to describe it are used interchangeably (but mean different things), organisations measure it in different ways, and there’s not a lot of guidance on what to do about it once you have measured it.
It’s of interest to our work because a gender pay gap usually indicates that there are more men in those higher paid senior leadership roles. So working to address the pay gap is one way to also address gender equity in leadership – what gets measured gets managed after all.
So I’ve been having conversations with people who know much more about the gender pay gap than I do (Thank you Jenny Skinner and Paula Booth from Manatū Wāhine Ministry for Women, New Zealand and Kathleen Webber from LiveRem) and have put together some resources, to answer some common gender pay gap questions.
What's the difference between pay EQUALITY and pay EQUITY?
Gender EQUAL pay is where women and men are paid the same for the same role. This is a requirement of the Equal Pay Act 1972 .
There was some confusion recently when tech start up Tracksuit celebrated their 0% like-for-like gender pay gap. Essentially they were meeting legal requirements for pay equality.
While complying with the law seems like a weird thing to celebrate, these kinds of pay disparities are more common than people realise.
Women are more often accorded less value in the workplace because of naturalised assumptions that she’s going to be having a baby or prioritising her children (and therefore not her work). Whereas men are more likely to be seen as breadwinners and paid more.
We don’t tend to notice it because it’s easy to rationalise it as a ‘choice’ that women make to prioritise their families; and there is usually not enough specific evidence to prove their is anything untoward going on.
It’s called the motherhood penalty and wrapped up in a whole bunch of unconscious bias and normalised discrimination.
Gender EQUITY is where women and men are paid the same for COMPARABLE roles (although confusingly comparing the SAME role across industries/between organisations can also be referred to as EQUITY).
For gender equitable pay you need to compare pay for different roles using a set of standardised measurements. For example, Manatū Wāhine Ministry for Women, New Zealand describes comparing roles that have “the same or similar level of skill, responsibility, and effort”.
As you can imagine though, this can be difficult to measure and address across industries. As we don’t often have the granular transparency around what different genders are paid.
We also tend to ‘value’ roles differently even if they (arguably) have similar levels of skill, responsibility and effort. For example, care professions like health-care, child-care, elder care are usually lower-paid, and tend to have more women.
How do you measure the gender pay gap?
Some of the confusion about gender pay gap reporting is that there are different ways to measure it and different terms used to describe this.
The OVERALL GENDER PAY GAP is calculated on the difference between the pay men receive and the pay women receive.
This is usually calculated based on a MEDIAN number (i.e. the middle number in a range).
You line up the pay for each of your female employees from lowest to highest and then do the same for men. You identify the people in the middle of both those lists and compare the % difference of their pays.
Based on the Household Labour Force Survey (Stats NZ) the NZ Gender Pay gap is currently 8.2%
However, there are other terms you may hear which have different implications for addressing leadership and gender equity.
For example, you might hear the gender pay gap referred to as the VERTICAL GENDER PAY GAP because of how it represents comparisons up and down hierarchical levels.
You might also hear the term HORIZONTAL GENDER PAY GAP, which tends to refer to comparisons across roles. These are usually calculated as a MEAN (i.e. an average) and can be either:
- The difference in pay between men and women performing the SAME job, with the same skills, experience, and qualifications (i.e. PAY EQUALITY within organisations or PAY PARITY between organisations and industries). OR.
- The difference in pay between men and women performing jobs that are COMPARABLE in terms of skills, experience, and qualifications (also often referred to as PAY EQUITY).
What can you do to close your gender pay gap?
Here are THREE things you can do.
Pay and pay gap transparency
When you know what your pay gaps are, you can get to work on closing them.
There are two ways you can do this:
- Share your gender pay gap on Mindthegap.nz. Publishing your gender pay gap not only demonstrates your commitment to closing it but gives you the motivation to do so.
- Openly share what individuals are paid (with their permission though). This makes the gap transparent and tangible, by shining a light on any systemic biases, the motherhood penalty, and the impact this has on the pipeline of women into leadership. Have a look at this example of what Tracksuit did)
Salary banding
Salary banding sets objective benchmarks for what people in comparable roles should be paid irrespective of whether those roles are ‘gendered’ (i.e. usually roles that have more women in them).
It works by categorising different roles according to skills, experience, and qualifications. I’ve worked with Hays pay banding before but LiveRem also includes a salary banding tool in their gender pay gap reporting.
Build an inclusive leadership culture
One of the main reasons we have gender pay gaps is we still tend to see more men in higher paid senior leadership roles than we see women.
To date, much of the efforts to tackle this have focused on ‘fixing’ women but new research (including my own) points to leadership cultures as well as systems and structures that support women.
Get in touch if you'd like to know more about how your gender pay gap data can be used to drive greater diversity and inclusion in leadership.
We work with organisations to help them understand their leadership inclusion challenges, develop customised road maps for improving the recruitment, retention and representation of women in leadership roles and develop capabilities for inclusive & high-performing leadership. We’d love to help you close your gender pay gap.
