When it comes to pay, equitable isn’t the same as equal

Guest post from Ruth Thomas, Industry Principal and Senior Consultant, Curo

Quite rightly – and thanks in no small part to the highly significant #metoo movement (which didn’t just focus on sexual harassment, but became a much larger rallying call for all forms of discriminatory and inequitable behaviour) – businesses are operating in much more equality-analysed times.

As a result pay equity has become a compelling issue for business leaders with legislation emerging globally on pay gaps which is driving employee expectations for greater transparency and increased exposure to potential litigation.

Leading employers are also recognizing that pay equity increasingly impacts brand perception and the ability to attract and retain talent. In the UK, two-thirds of women now take a company’s Gender Pay Gap into consideration before applying for a job there, according to research from the Equality and Human Rights Commission.

The case for pay to be transparent isn’t just beneficial from a brand/reputational standpoint. McKinsey’s seminal ‘Why Diversity Matters’ report (first published in 2015, and updated in 2018), reveals a strong correlation between diversity and business performance – with companies ranked in the top-quartile for gender diversity their executive teams being 21% more likely to outperform on profitability and 27% more likely to have superior value creation.

As a result CEO’s are increasingly want to know where their companies stand. There has never been a more important time to start measuring and tracking pay equity and pay gaps.

If we fix pay we fix the pay gap, yes?

All too often when tackling pay equity or trying to reduce pay gaps the focus is solely on fixing pay. If we pay everyone equally then the pay gaps go away yes? Well, unfortunately no. This really become apparent in the UK with the Gender Pay Gap reporting regulations which came into effect 5 April 2017, with organisationsorganizations over 250 employees being required to publicly declare their mean and median pay and bonus gaps, together with gender representation across pay quartiles. March/April 2019 saw the second round of reporting and the median pay gap across all reporting companies rose to 9.5% with more than a quarter of companies paying women over 20% less than men on median hourly pay basis. Business leaders, who assumed they were paying everyone equally, were genuinely surprised by the outcomes and this has led to some scepticism on the validity of the Gender Pay Gap as a measure of pay equity. John Phelan, Economist at Centre of the American Experiment, provocatively claimed “The ‘gender wage gap’ is as real as a Unicorn and has been killed more times than Michael Myers.” and that it can be explained entirely by the fact that, while having the same choice sets in the workplace, women and men make different choices.

But this view overlooks the reason why women are making different choices than men. We are told the reason why women are paid less than men is because they choose to have children. Actually it’s not that women want to leave their jobs to take care of their children, it’s that they’re forced to due to lack of flexibility in the workplace. We are also told women are not great at negotiating pay, but research has shown that women ask just as much as men but when they do they are perceived as high maintenance and too demanding. This article from CNBC dispels some more of these established myths about women’s choices.

Pay Equity Vs Pay Equality

Maybe those who argue that the Gender Pay Gap isn’t real are confused between the notions of pay equity and pay equality. Pay Equity, as we know is equal pay for work of equal value. But pay gaps are more a result of a lack of Pay Equality, where all employees have the opportunity to earn the same pay.

Actions to address pay equality are not necessarily related to pay but rather broader diversity initiatives that address systemic bias and tackle unseen barriers that occur at different stages of the employee lifecycle. Curo’s partner My Family Care aptly capture’s this in their leaky pipe model illustrating typical leaks in the career pipeline. For some potential employees they never even get to enter the pipeline.

Enabling everyone to equal opportunities to work and progress in order to confront structural inequality has to be the goal. But this will require employers to rethink the whole notion of how, where and when work is done.

To find out more about how Curo can help you with your Pay Equity challenges please visit www.curocomp.com