Thought leadership

Why it’s Important to Discover and Reduce a Gender Pay Gap

Why it’s Important to Discover and Reduce a Gender Pay Gap

Why Ensuring Gender Pay Equity Supports Organizational Wellbeing

Most leaders are familiar with the gender pay gap, but should you think about it in the context of your organization? Many leaders may discount the possibility, but the question deserves consideration. Why? What benefits come from ensuring gender pay equality and why does evaluating pay equity make sense as part of best practice to foster overall organizational wellbeing?

Understand the pay gap

The gender pay gap is an increasingly recognized phenomenon wherein female employees receive on average less compensation than male counterparts for the same work. In the U.S. during 2017, for example women earned about 82 percent in weekly full-time earning what men earned for the same function, according to the Institute for Women’s Policy Research (

But a nationwide study doesn't reflect compensation practices in a specific organization. Women in your company may be paid the same as men, or they may be paid less. How can you know? And what should you do about it?

Conduct salary research

The first step in dealing with a gender pay gap is to learn whether it exists and how bad it is. This is where salary consulting comes into play. A salary consultant is an expert in determining what various positions are worth, how to attract better candidates, how to pay them fairly, and how to judge your overall compensation strategies.

A salary evaluation can accurately assess the positions and payment within a company. You may have no equal positions by which to judge pay for executives, managers, or within certain departments. Finding comparable positions outside the company can be difficult without knowing more about companies and their employees' functions.

Management leads the way

Leaders who truly want to uncover and change an unfair situation within their organizations must lead the way. By being transparent about findings that indicate how the company can do better to pay fairly, leaders can involve employees in suggesting how to address gaps. Leaders can then revisit the pay gap issue and report back on how their initiatives are improving the situation.

Clearly define measurable goals to help managers reduce a pay gap. For example, announce a salary audit in one year and create the expectation that all managers will reduce their pay discrepancies.

Consider creating goals for hiring managers. For example, boosting female promotions to a given level as part of an organizational wellbeing initiative can encourage all employees to learn skills and gain new certifications.

Improve standardized practices

Hiring and promotion are two key methods for addressing a gender pay gap. Can the organization boost female involvement by advertising in publications or associations led by women? How about encouraging promotion of women in positions they traditionally may not pursue? Do applications, forms, hiring questions, and evaluations avoid bias toward women, mothers, or others juggling work-life challenges?

Often, pay bias isn't overt or intentional. Pay bias often is the product of unconscious tendencies that devalue some people's contribution and overvalue others'. Consulting an experienced expert to discuss ways to standardize hiring and recognize bias can improve employee wellbeing as well as organizational wellbeing.

Harness the benefits of pay equality

Actively trying to identify and reduce a gender pay gap can be a time-consuming process that takes years to complete. So, why should an organization attempt it? Companies that fail to fairly compensate a group of employees for their work limit the pool of executives, skilled workers, and tradespeople. That means missing out on great talent to advance the organization. At its extreme, unresolved pay inequity can expose an organization to legal action and negative media coverage.

More likely however, pay equality problems can impact morale among existing staff, leading to employee disengagement. The business may suffer from lower productivity, higher turnover, and lack of creativity and initiative.

Make a salary study part of your compensation best practice. Gallagher’s compensation experts can help you draft a plan to recognize and correct pay discrepancies to help ensure both employee engagement and wellbeing, and overall organizational wellbeing.

Jim Fox, Ph.D.

Dr. Fox is a Managing Director of the public sector and higher education compensation part of the Gallagher Human Resources & Compensation Consulting practice. In this capacity, Dr. Fox serves as project director and/or technical advisor, providing technical direction and quality assurance. He is responsible for all consulting activities in the areas of job evaluation and compensation, organization analysis, personnel systems and policy development.

Dr. Fox has been directing classification and compensation studies for more than ...

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