How salary transparency can create gender equality

While not new to the public sector, salary transparency in the private sector is much less common.

How salary transparency can create gender equality

CEO and founder of Shape Talent Sharon Peake, discusses how salary transparency in the workplace can play a role in enhancing gender equality.

While not new to the public sector, salary transparency in the private sector is much less common. Traditionally, salary bands have been relatively guarded within organisations. But collectively this has resulted in damaging consequences that perpetuate inequality – and this disadvantages women, and other under-represented groups the most. 

The state of the gender pay gap

In looking at the scale of the challenge it is important to distinguish between the well-touted gender pay gap – which currently stands at 14.9% in the UK – and equal pay for equal work. The two are very different. Since 2017 private sector companies with over 250 employees have been required to disclose annually their gender pay gap. That is, the difference in the average earnings of all men and women in the company. If you have more men in leadership and more women in lower-paid roles, you will have a larger gender pay gap. This metric is effectively a measure of women’s representation in senior roles. 

On the other hand, the UK has had equal pay for equal work laws in place since 1970 to ensure that men and women are not paid differently for work of equal value. Yet while it is illegal to pay women less than men for equal value work, it is well known that this phenomenon continues. The recent case in Morrison’s, where store workers demonstrated their work was of equal value to the (higher paid) distribution centre employees, is a case in point.

So both representation in leadership roles and pay are an issue facing women and workplaces. 

In a recent survey of over 2,350 women in the UK, we found women face barriers when it comes to achieving fair pay. Gender stereotyping means that relative to men, women can experience a lower return, and even a penalty or backlash for demonstrating stereotypically masculine traits such as ambition, confidence and assertiveness in the workplace. Women told us:

  • 50% feel greedy asking for a pay rise
  • 56% worry about the consequences of asking for a raise and being unsuccessful
  • 29% felt unable to negotiate the terms of their offer

This highlights how we as society need to shift the responsibility away from women and individuals to ask and negotiate for fair pay, and instead encourage companies to do better and pay people their worth. Promoting salary transparency may be part of the solution. 

So exactly how can pay transparency help create equality?

Pay transparency can involve a variety of interventions, from transparency around the pay setting process, to transparency of pay ranges on job ads, through to transparency of individual salaries. 

For example, transparency in pay ranges in job ads – a trend we are observing in several US states – helps reduce incoming pay anchoring differences for women and under-represented talent. It also helps support deliberate career choices for employees early in their career, motivating them to develop skills to qualify for higher paying careers. Pay transparency has further been reported to increase employee engagement and retention. 

Pay transparency needs to be managed carefully

Moving towards transparency can set off unintended consequences if not managed carefully, such as increasing line manager overwhelm in responding to individual requests, creating jealousy amongst employees, or resulting in higher salary bills to compensate for inadequacies in pay distribution. So before embarking on the process there are some important foundations to address.

Start by reviewing and addressing current and historic pay discrepancies. Ensure a reward structure that has clarity over roles and grades and clearly defined salary bands, which may be broad or narrow, but should be non-overlapping. Benchmark salaries by role and location. The reality is that not all roles are equal. Some roles are harder to source and in much greater demand, pushing up salaries in the market. By benchmarking roles with a reputable source, you can better defend decisions around differences in pay for different roles. Make explicit the performance related element of pay with clear and objective criteria. Finally, train line leaders to ensure they understand and apply the systems and structures well and can confidently explain this to their teams, before moving to pay transparency. 

Don’t forget other benefits

Remember that salary is not the only element of a remuneration package. For companies with tight budgets, over-indexing on other benefits can help ensure an attractive proposition for employees. Training and development opportunities, additional holiday entitlement, pension provisions, generous parental leave policies, and (importantly) flexible working can help add real and meaningful value to a package. The best way to get this right is to ask employees what benefits they value. Their answers might surprise you. I once had an employee who more than anything valued having access to the latest tech. So any time a new laptop or gadget was released I ensured he had access first and was part of any beta trial in the company to give feedback on its effectiveness. The look on his face each time he gained a new ‘gadget’ was infectious!

In essence, pay transparency can be a game-changing enabler in creating more gender equal workplaces. By shifting responsibility from individuals to negotiate a fair deal, to organisations to offer a fair deal, women stand to gain enormously.

Sharon Peake
Sharon Peake

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