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The cost of not reducing the gender pay gap in 2022

The best time to have started solving the gender pay gaps in an organisation was years ago. The second-best time is 2022. 

Every year a business waits, it costs an additional $60 per employee per year to close the gap. Because of the compounding effects of pay equity issues over time, it will never be cheaper to fix than today. 

But the answer to erasing gender-based pay discrepancies in Australia doesn’t lie solely with increasing salaries for underpaid women. Research from Gartner reveals gender pay gaps are not exclusively born from total rewards. They’re often inherited from, and perpetuated by, other parts of the talent life cycle, including recruitment practices, talent sourcing and a lack of ongoing analysis of these issues. 

Ultimately, most organisations focus on addressing the pay gap for women financially, treating the symptom rather than the source. This results in a series of costly, disjointed adjustments to fix pay gaps.

As a result, efforts to fix the issue need to go further than simply offering women the same amount of money as men, though it is obviously a crucial first step. It requires a cultural change from within an organisation. 

To do this, leaders should consider introducing preventive strategies that will help stop the cause of the issue from the outset. 

Gartner recommends a series of small but productive steps that can be undertaken by any business, regardless of size. 

Review the recruitment process

In addition to making more equitable pay decisions, organisations should be focusing on mitigating bias in their talent processes that are otherwise likely to enhance the pay gap. 

For instance, blind resume screening is a great technique for organisations as it assists in getting diverse candidates from the application stage to the interview stage. 

Gartner research has revealed that organisations with better diversity in their workforce tend to perform better when erasing pay gaps. Improving recruitment processes to support diversity will set an organisation up for success when it comes to pay equality.

Biases in the hiring process can also extend into pay negotiations. To counter these, businesses should be asking candidates for their salary expectations instead of salary history. Biases related to previous salaries for a candidate can also maintain pay gaps and be a barrier to closing them.

Manage the issue through ongoing analysis

You can’t see what you don’t measure. According to Gartner, around a third of organisations only conduct pay gap analysis on an ad hoc basis, and 40 per cent who undertake this analysis do so as a one-off exercise each year. 

For any organisation that conducts annual or ad-hoc pay analysis, they’re costing themselves more work and a much bigger investment. 

Instead, organisations should consider ongoing pay gap analysis as part of the regular function of HR and Finance teams. Constant monitoring of pay discrepancies ensures that other elements of pay structures such as performance incentives and promotions don’t contribute to inequity. 

Be transparent when it comes to pay 

Cultural, legislative and financial barriers can make pay transparency a difficult topic to openly discuss and address by business leaders. However, those who can promote open conversations about pay are better positioned to address the pay gap and manage employees’ perceptions around the issue.

With current staff, it’s important to openly discuss how remuneration is calculated for all staff and offer managers external data and resources that can demonstrate how pay is benchmarked against the industry.

Putting these conversations in place will evolve company culture and build better dialogue amongst managers and employees. 

Organisations that can implement preventative strategies to the gender pay gap will not only save themselves money long term, but they can also increase intent to stay. Gartner research revealed organisations that can increase inclusivity by 20 per cent would also gain at least a 5 per cent increase in intent to stay – a crucial advantage to have in the current labour market. 

Read more: What gender equality looks like for female business leaders in 2021

Read more5 personal branding tips for women

Read more: Sustainability: Solutions require diversity of leadership and talent

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Jasleen Kaur

Jasleen Kaur

Jasleen Kaur is an Executive Advisor in Gartner's HR Research and Advisory Practice. In this role, she partners with Heads of HR and the talent management teams globally, to drive strategic decision making and implementation in areas of Diversity and Inclusion, Talent Analytics, Performance Management and Wellbeing, using Gartner's evidence-based research.

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