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How can SMEs tackle the gender pay gap?

Written by Ryan McChrystal on Wednesday, 05 November 2014. Posted in Interviews

With the UK falling even further behind on gender equality in the workplace, what can be done to tackle the issue?

How can SMEs tackle the gender pay gap?

Great efforts have been made to improve gender diversity in the workplace over recent years but inequality still persists. According to the latest report by the World Economic Forum, global gender equality in the workplace “won’t be achieved until 2095”. The picture is worse in some countries than others: the UK has fallen to 26th place, behind both Ireland and the United States. Even developing nations in Africa, such as Rwanda, have overtaken Blighty.

For five years Britain has been slipping down the ranks and while companies have been under pressure to do something to address the imbalance for some time, most only pay lip service to the idea. Overall, however, the gender gap has closed 4%, from 56% in 2006 to 60% today. So while gender equality is achievable, at this rate we’ll have to wait a very long time. 

The business case for gender equality is there. The report indicated a correlation between gender equality and economic success, pointing out companies that recruit and retain women and put them in leadership roles tend to outperform those that do not. While there is insufficient traction to support substantive change most business leaders still rail against quotas. So just what can be done to improve the gender mix in British businesses?

 

"We need to create a level playing field" , Lisa Cohen, assistant professor, Desautels Faculty of Management

We can’t lose track of the reality that the solution to inequality is not to fix women but to create a more level playing field. This means gaining a better understanding of the structural causes of inequality and finding ways to dismantle these.

In the workplace there are situations that promote equality. For example, I carried out research that showed women are more likely to reach high-level roles within companies if there is already a high proportion of female managers there.

The demographic make-up of companies has a lasting influence not only on management but on employees throughout the entire organisation. Composition affects men and women differently. For instance, the likelihood of women leaving an organisation varies depending on the proportion of women in them but there is no parallel effect for men. These differences may seem minor individually but are much more significant when considered alongside the many other differences – in pay, promotion, turnover – related to the relative number of women in an organisation. We need more female managers in order to attract, promote and retain more female managers and employees at all levels but the catch is how do we get them? This is especially tricky for entrepreneurs in the technology sector where we see relatively few women coming up or among the founders and funders. 

There is no magic pill or simple single solution to issues of inequality. This needs to be attacked on multiple fronts. If something helps above and beyond its costs, then it is worth continuing.

 

"Employees should have clear pay structures", Donald MacKinnon, director of legal services, Law At Work

Where possible, and practicable, we urge our clients to tackle any inequalities within the workplace. For example, employers should have clear pay structures and ideally have completed a formal job evaluation process to ensure that they are able to defend any equal pay claims. 

The government’s Equal Pay Act is being increasingly used by claimants in the private sector following success in the public sector, which has seen significant pay-outs to female workers who historically have been paid less than equivalent-level male staff. The recent introduction of equality audits by the government, following an organisation losing an equal pay claim, has meant that many organisations are now undertaking audits as part of their business activities to ensure that they do not fall foul of the law.

To further decrease inequality in the workplace, the government is introducing shared parental leave as of April 2015. This enshrines in the workplace that father and mother have an equitable division for responsibility for childcare; shifting the perception that childcare is a predominantly female role.

Should the gender pay gap remain stubbornly large, pressure will increase for more government action like the introduction or enforcement of formal quotas in the boardroom, which is something that many businesses may not welcome. 

About the Author

Ryan McChrystal

Ryan McChrystal

In a previous life McChrystal wrote about asset management in the Middle East. A history and politics graduate from the north of Ireland, he now focuses his efforts a little closer to home. 

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