Without data, HR can’t address gender pay gap

Though pay transparency is increasingly seen as a crucial part of the gender pay discussion, without collecting the right kinds of data, even the best intentions will fail.

At the heart of Australia’s inaction on gender pay are the many misconceptions around gender pay – what it is and what it would take to fix it.
“The main thing that people get wrong is thinking that the gender pay gap will naturally fix itself,” said Damien Andreasen, vice-president APJ at HiBob.

While more women are finding their way into management positions, barriers still persist at top leadership.

“Current perceptions of the gender pay gap are also not good,” added Mr Andreasen, explaining that many HR professionals believe gender pay has suffered during the recent economic downturn.

Invisible targets

“HR plays a pivotal role in closing the gender pay gap,” Mr Andreasen told HR Leader.

“As the department with access to the most valuable asset – employee information – HR can collect and analyse data on demographics, compensation, career trajectories, and promotion rates to identify trends and patterns that may indicate gender-based disparities,” he explained.

Naturally, we asked, if HR has the tools to close the gap, what’s holding it back? Well, said Mr Andreasen, we simply aren’t collecting the data that’s out there.

“Progression on closing the gender pay gap has been slow because there has been a lack of investment in diversity, equity, and inclusion (DEI) initiatives and inefficient data to truly understand the extent of the problem within organisations,” he said.

Without collecting the data, leadership teams are left in the dark – often unaware of their performance on gender pay. Without being confronted by the data, leadership is not being held to account.

“As companies work to support and advance women, businesses should proactively track and measure employees’ outcomes in areas such as hiring, promotions, and attrition, and learn from data collected to fix trouble spots,” he said. “And with flexibility becoming the norm for many businesses, they can offer flexible work arrangements while still establishing clear expectations.”

Being the change

Having greater representation of women and achieving gender pay parity, said Mr Andreasen, “can only do businesses good”. He cited KPMG data, which suggests that halving the labour participation gap between men and women would add $60 billion to Australia’s gross domestic product (GDP) over 20 years while living standards would rise by $140 billion.

“Recent research by BlackRock also uncovers how companies with the most diverse workforces outperform their country and industry group peers with the least-diverse workforces in terms of return on assets,” he added.

Understanding the business case will likely galvanise support for broader action on gender pay. Once the incentive is clear, it’s up to business leaders to make their commitments actionable.

We asked Mr Andreasen how best to go about this. Transparency is everything, he said.

“I would encourage employers to regularly conduct pay equity audits to identify and address pay disparities that cannot be explained by factors such as work experience or job performance,” he explained.

A company’s approach to pay says a lot about its values. By aligning your pay transparency philosophy with company culture, businesses can prove their commitment to espoused values.

The flow-on effects of this alignment are considerable – from better talent attraction and retention to brand differentiation more broadly, said Mr Andreasen.

“When organisations are open and transparent about their pay structure, they are able to set themselves apart from their competitors and attract, hire and retain the best talent,” he explained.

“Increasing awareness around pay transparency goes a long way in gaining employee confidence and giving your people the data they need to have informed conversations.”

Data, data, and more data

Transparency requires data. You need something to be transparent about, after all. Mr Andreasen stressed that having the right data will differentiate commitments in name and commitments in action.

“Leveraging data will be invaluable in tracking the progress over time and allows HR leaders to communicate with C-suite and people managers on the importance of closing the gender pay gap,” he said.

“HR leaders can also implement transparent compensation structures that clearly define pay ranges for employees and implement hiring and promotion policies that facilitate greater gender equality. This includes providing women with more leadership opportunities and anonymising job applications during job interviews so women can be on the same playing field as their male counterparts.”

“In the modern world of work, having a fair and equitable organisational culture is more important than ever — and employees want to know you’re working to eliminate the gender pay gap,” he concluded.