The gender pay divide: more than a dollars and cents discussion

Despite international and multifaceted efforts to bridge the gender pay gap,
the wage dissonance between men and women continues to cause frustration. With your executives and HR departments fixated on bridging the gap, perhaps its time to learn the in’s and out’s, writes Bennet Nichol

Women are engaged in the workplace all over the globe. According to the World Bank nearly 50 percent of the world’s women are working in some capacity. They represent a massive demographic within all industrial sectors and have a significant impact on their organisations.

Unfortunately, governments, sports people, economists and businesses are all reporting that men are on average paid more than women. The gender pay gap debate has been a cause of frustration for a long time, and often divides people into camps separated by tightly-wound ideological fences.

As a result, governments across the developed world have legislated anti-discrimination acts as a result of this phenomenon, or at least extended their pre-existing laws to encompass gender discrimination. So, problem solved right? If it’s illegal to pay men more than women for the same job, logically the gap will close.

However, women and men are yet to achieve the same average pay rate across the board. The persistence of the gender pay gap seems to defy the efforts of the organisations, societies and governments that are trying to bridge it.

Perhaps the problem requires a more creative approach. Maybe it’s time we take a hard look at the way we analyse gender imbalance in the workplace, and dig a little deeper into why women are not equally represented.

Common conceptions

The gender pay gap has been targeted by governments across the globe. The international effort to legislate preventive laws has tried, and in some measures worked to prevent gender discrimination in the workplace. In Australia, the Australian Human Rights Commission Act 1986 prohibits employers from hiring, ring and setting pay rates based upon gender (and other factors such as race). However, over 30 years since it’s enactment, the gender pay gap statistics have remained largely unaffected.

Doubling down on the efforts to regulate women’s share of income and workplace representation, the Australian Government bred a statutory agency, the Workplace Gender Equality Agency (WGEA) which is designed to provide a resource for organisations to help understand workplace gender equality and also ensure they are adhering to specific requirements set by the law. Despite these efforts, the gender pay gap has remained unsolved.

Perhaps then, the metrics and the presumptions of the WGEA and other regulators are causing more harm than good. The WGEA and most organisations work around a key assumption, that the gender pay gap is an adequate benchmark in which to measure the larger issue of women’s representation in the global workforce.

In short, the gender pay gap is calculated by taking women’s average income and comparing it to men’s average income. The difference between the two is then presented as a percentage, or the official ‘gap’. In Australia, this gap currently sits around 14.8 percent.

To many this seems like a simple but effective measure in which to judge workplace gender equality’s status. However, as many women in the workplace will attest to, the issue is infinitely more nuanced than a simple percentage gap in pay.

What’s wrong with the gap math?

The gender pay gap percentage fails on a few levels. Most significantly, it does not measure like-for-like positions. What this means is taking the average of both gender’s income side by side eliminates a core element that determines a salary: position.

PwC one of the world’s ‘Big Four’ auditors and professional services providers – which employs over 250 000 people globally – released their gender pay gap report earlier
this year with surprising results. On a like-for-like basis, comparing men and women in identical roles, they had a pay gap of 0.3 percent. Company wide and not taking into account position, the pay gap was 12.3 percent.

On a national level, governments are also taking more care to ensure that men and women in the same position are paid the same.

At the start of 2018, Iceland introduced a new law that forces companies and organisations to pay women and men equally. To ensure everyone is behaving, firms employing
25 or more people need to prove to they are not paying women and men in like-for-like jobs differently. An official certification is granted to those who do, and for organisations that fail to comply are issued with heavy fines.

So in both these cases, men and women are paid the same for the same job. However, PwC’s 12.3 percent company wide pay gap reveals a more complex issue. Women and men are not paid differently, but hold positions at different levels. The simple division of men and women’s pay doesn’t provide the information that HR departments, bosses and employers are all looking for.

Fewer women in the boardroom

Moving away from the gender pay gap then, how can we properly determine the true status of women in the workforce? There is data everywhere that shows the displacement of men and women across many different industries. There are very large gaps in gender representation across various fields. For example in Australia, the mining sector and the construction industry are 83 percent male. Healthcare is 80 percent female, and the education and training sector is 63 percent female.

“It would take an extra 19,000 AUD of pay to boost a woman’s life satisfaction by the same amount that a man would gain from an extra 8000 AUD of pay”

This tells us that women and men dominate different fields. While there is no doubt that a mining position in Australia is quite a bit more lucrative than a teaching position – and that can contribute to a displacement in the national pay gap averages – it pales in comparison to the startling difference in women’s representation at the managerial level.

Women represent five percent of fortune 500 CEOs, and only 17 percent of CEOs in Australia. The long term data shows that women’s representation at the highest level of businesses is growing much slower than their participation in the general workforce.

Boardrooms are where all they key decisions are made, the big picture stuff. Most importantly, it’s where the culture of an organisation is directed, and it’s where women are represented the least. A Pearson Institute for International Economics paper reveals that bringing 30 percent more women into corporate leadership roles increases profitability by 15 percent, due to the diversity of thinking that women bring to the table. Undoubtedly a strong argument for bringing women up to the top.

Understanding why women have not permeated the top level of their fields in the same way as they have the lower levels is a topic of contentious debate. Award-winning behavioural scientist Francesca Gino at Harvard Business School presents a study on workplace happiness that may help us understand how to get more women into the boardroom.

Gino suggests that most women who occupy senior management positions are less satis ed than men in the same position. This is not due to a lack of competence or drive (nor does it apply to all women). The paper found that top level positions present bene ts that appeal more to men than to women. The C-suite is laden with prestige, money and power at the cost of time.

The study reveals that women have more life goals than men, and value them higher. Therefore, the flexibility and time are more valuable than money or prestige.

In economic terms, “…it would take an extra 19,000 AUD of pay to boost a woman’s life satisfaction by the same amount that a man would gain from an extra 8000 AUD of pay,” writes Gino in the Scientific American. “What this translates into is a clear recommendation for organisations and their leaders: if they are serious about the bene ts of female leadership, they may need to pay more for it.” A suggestion which may not sit well with others in like roles.

So next time you catch the HR department strategising a way to reduce their gender pay gap, or the boss stressing over the percentages, engage in the conversation. The role of women in the workplace is more complex than a simple dollars and cents argument, and requires a more creative approach. Learning from, listening to and understanding what women need, rather than crunching a number may serve us all better.