Closing the gender pay gap: Part 1 — why it matters for finance leaders, compliance and engagement
According to the World Economic Forum’s Gender Gap Report in 2017, although many countries around the globe are taking positive steps to address the gender pay gap, men are still being paid much more than women, and their earnings are accelerating at a faster pace. The gender pay gap represents both a compliance issue — especially as governments around the world begin to enact new laws to close the gap — and an employee engagement challenge, both of which can impact your bottom line.
This is part one of a two-part series that explores the importance of addressing the gender pay gap. Here, we discuss why it’s vital for finance leaders, in particular, to participate in addressing the issue within their respective organisations.
Going beyond flexibility and support
Developing policies that address gender pay equity isn’t just about fairness and legal compliance – it can directly contribute to your bottom line. According to a three year study carried out by the Peterson Institute of about 22,000 publicly-traded companies in 91 countries ranging from Mexico to Norway and Italy, “companies with 30% female executives rake in as much as six percentage points more in profits.”
One of the study’s co- authors, Tyler Moran, commented, “if you’re a firm and you’re discriminating against potential female leaders, that means you’re essentially doing a bad job of picking the best leader for your firm.”
Investing in closing the gender pay gap
One successful organisation in a highly-competitive industry is Salesforce, which has gone beyond flexibility and benefits to attract and engage female talent. Salesforce is attacking its gender pay gap head on, garnering attention and enhancing its employer value proposition among women.
Fortune reports that Salesforce recently performed a salary audit for its 17,000 employees to determine if men and women were receiving equal pay for equal work. After analysing the results, the business indeed found a gender pay issue. According to Salesforce, the organisation spent $3 million USD to eliminate these pay differences. It also seeks to close its gender gap by accelerating its leadership development program for women, which resulted in a 33 percent increase in the number of women promoted last year.
The essential role of financial leaders
Financial leaders will play a key role in supporting organisational efforts to identify and close the gender pay gap, if applicable, at every step of that challenging process. Here are a few on the necessary skills and capabilities they bring to the table:
- Data and data analytics capability. Financial leaders should provide the financial support necessary to update systems. This could help ensure their organisations can internally aggregate and report on data relevant to understanding their organisation’s pay and compensation data, in order to uncover potential pay equity issues.
- Financial analysis. Financial leaders should also provide the necessary financial analysis to close identified pay equity gaps. The work of analysing the problem, exploring options to solve it and deciding upon solutions optimal for the organisation will require a deep level of financial know-how.
- Audit practices. Offer methodologies and analytical expertise to conduct and analyse ongoing pay audits that will be crucial components of resolving pay equity issues. Financial leaders should be partnering with other C-suite leaders and legal counsel to effectively structure, conduct and evaluate such audits.
- Budget planning. Provide compensation budget and budget analysis for the closing of pay gaps once they are identified and analysed. As the Salesforce example cited above shows, organisations need to invest to close pay gaps.
- Procedural overhaul. Promote policies and procedures that help bring about gender pay equity. For example, financial leaders may wish to partner with HR to craft policies promoting greater pay transparency, so gaps get exposed to the cleansing light of day. They may also want to support investments in accelerated leadership programs for women. No matter the policy change, it will require buy-in and potential financial investment from the organisation’s financial leaders.
Addressing pay equity gaps is pre-eminently a task for finance leaders largely because it’s not just a fairness and compliance issue, but a financial one. Interested in hearing more about this topic? We chatted to Buffer, a company that instituted pay transparency for their entire company. Watch now.
Original post by ADP Spark.