What is a gender pay gap?

A gender pay gap is a difference in pay between men’s and women’s average salaries. 

To calculate the pay gap, take a group of men’s wages and a group of women’s wages, and compare the median of each.

Since the Equal Pay Act of 1963, women’s earnings in the US have increased from $0.59 for every $1.00 a man earns to $0.82. Current data shows that the wage gap is minimal between ages 18-39, while it widens for women 40 and older.

Why should HR leaders care about the gender pay gap?

Paying people fairly is part of treating them ethically. Equal compensation opportunities can also attract talented professionals and keep them engaged. Moreover, paying men and women according to the same criteria shows transparency and contributes to a positive brand reputation.

Because the data from the gender pay gap formula can be limited, HR leaders must dig deep to determine if and why there’s a gender pay gap.

What can HR leaders do to reduce the gender pay gap?

To reduce a potential gender wage gap in your company: 

• Consider relevant factors. The Equal Pay Act of 1963 states that employers must not discriminate between employees based on sex. Employers must pay members of both sexes equally based on the “performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions …”  
• Offer parental leave for both parents. Generally, women take more time off than men following birth or adoption to recover and bond with the child. However, by providing equal opportunities for men and women to take leave, women can choose how to balance their careers with family life.  
• Create transparent policies. Merit-based raises and promotions support transparency. Evaluate people’s accomplishments, contributions, and dedication to encourage unbiased treatment.
• Run an internal audit. Analyze payroll to check if a gender pay gap exists. If it does, consider if there are any crucial factors involved. What’s the position? Are the employees working full-time or part-time? How long have they been at the company?
• Survey your people. Determine why the pay gap exists through a survey. Are women working in lower-paying jobs, and if so, why? Do women prefer fewer hours or gravitate towards certain positions? Or is there something you can do to help them pursue higher-paying jobs? Perhaps an L&D program can give them the opportunity to upskill and land higher-paying positions.

Why should eliminating the gender pay gap be a part of modern HR strategy?

Ethical practices and a positive company brand are essential in today’s competitive, internet-based business world. People are attracted to working at organizations with good reputations among employees and customers. Transparent compensation practices reflect an HR strategy that encourages everyone to excel because of their talents, skills, drive, and dedication, not because of their gender.