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18th September 2020

Closing Gender Pay Gaps: 12 Solutions for Pay Equality

With an estimated 250+ years until the world reaches economic gender parity, gender pay gaps have proven some of the toughest divides to close. According to the World Economic Forum, progress towards gender parity in pay has stalled and even regressed in some places. Pay gaps are difficult to close (and keep closed) because they are the manifestation of larger systems of bias and inequality. Despite the challenges, permanently closing gender pay gaps will benefit women, bolster business performance and strengthen the global economy.

Gender pay gaps widen along the lines of race—with Black women in the US making 38% less than white men and 21% less than white women. Women—particularly women of color—are overrepresented in low-paying, insecure jobs with little to no benefits. Despite these numbers, gender pay gap discussions are rarely intersectional, preventing meaningful progress toward pay equality for all people.

In order to permanently close gender pay gaps we need meaningful commitment from government and business, as well as solutions that seek to tackle the root causes. In light of the first International Equal Pay Day, The B Team joined forces with the Center for Global Development, Open Data Charter and Open Government Partnership to publish a policy paper outlining the critical solutions businesses and governments should champion to advance pay equality. The full paper can be found here with highlights below.

Solutions For Business

Businesses should view pay equality and gender balance not only as moral imperatives, but as powerful economic opportunities.

1. Ensure equal pay: Commit to and ensure transparency around equal pay for equal work.

Even in the absence of a legislative mandate, businesses should voluntarily track pay across gender, race, parental status and other demographic characteristics—and encourage their suppliers to do the same. Efforts to close pay gaps should include an annual pay audit and mechanisms to ensure company-wide transparency around negotiation, pay, reward processes and salary ranges. Companies like Salesforce are leaders in the fight for equal pay. As of April 2020, Salesforce has spent more than $12 million to address unexplained pay differences along the lines of gender as well as race and ethnicity in the US—and has consequently been recognized as a top choice employer by Fortune, Forbes, Glassdoor and others.

2. Overcome bias in the system and embed gender and race-conscious hiring

Recruitment processes are often gender-biased and rely heavily on networks and referrals, placing women and underrepresented groups at a disadvantage. Companies should be cognizant of this and seek to mitigate bias wherever possible.

Al-based hiring platforms are becoming increasingly popular as a way to diversify the candidate pool and combat bias in hiring. Despite the varied success of these tools, businesses should employ cautious optimism with tech-based hiring solutions as they can prevent gender and race-conscious hiring by enabling gender and race-blind hiring.

Investing in long term diversity, equity and inclusion training, especially for senior leaders and hiring managers—as well as instituting inclusive hiring practices—is necessary in order to ensure gender-balanced and diverse outcomes.

3. Support mothers and families: Update and establish new policies that are gender-neutral and family friendly.

Globally, women take on 75% of all unpaid care work. The COVID-19 pandemic has exacerbated the burden of care work on women and the vulnerability of their jobs. Even in normal times, the disproportionate burden of unpaid care work forces women to interrupt their careers and work shorter hours in the formal economy. To support the growth and development of all employees, businesses should establish progressive, gender-neutral paid parental leave policies that extend beyond legal requirements. Paid parental leave as well as flexible and remote working policies are good for families and good for employee retention. When Google and Accenture enhanced their paid parental leave policies, retention among mothers increased significantly.

Women and Care Work

Globally, women take on 75% of all unpaid care work—and the COVID-19 pandemic has only exacerbated this burden.

4. Change who to change how: Commit to gender balanced and diverse leadership.

There is a stark lack of gender balance and diversity in leadership structures around the world. In the US, women comprise 21% of the C-suite with women of color representing only 4%. Lack of gender balance and diversity in leadership perpetuates pay gaps, leads to a lack of innovation, limited ability to problem solve and overall stagnation. In order to change how we do business we need to change who is in leadership.

Making time bound targets and public commitments is an important way for companies to make progress. Safaricom has set a target to reach 50/50 gender balance in senior management by 2021. IKEA has pledged to achieve complete gender balance in the leadership of all functions, locations, boards and committees by 2022.

5. Transparency is transformative: Provide salary ranges for new positions.

Research shows that while women now ask for raises as much as men, they are less likely to get them. Women are also less likely than men to negotiate upfront when there is no transparency around the salary range or negotiation process. This gender gap in negotiation diminishes and sometimes even reverses when salary ranges are made transparent. By providing salary ranges in job postings, businesses will indicate that negotiation is on the table and help mitigate pay gaps before they begin. Companies that provide salary transparency upfront will also attract a more diverse pool of applicants, including those from underrepresented or disadvantaged communities that may not be able to spend time chasing a job that doesn’t meet their needs. Pay transparency will save time and build trust in the long run.

6. Facilitate the path to the top: Provide development and network-building opportunities

On average, women and people of color do more “office housework” (notetaking, getting food and coffee, setting up meetings, etc.) and have less access than white men do to the development and network-building opportunities they need to advance in their careers. The lack of diversity we see in leadership is in part due to homogenized networking circles and patterns in mentorship. Women and people of color have less access to successful job referrals—with white women being 12% less likely to receive job referrals than white men—and women of color being 35% less likely. By developing mentorship programs (that focus on providing support and networking opportunities) and sponsorship schemes (that focus on ensuring access to high profile tasks, projects and promotion) businesses will support the career progression of women and diverse candidates who often lack these critical opportunities.

C-Suite Representation

In the US, women comprise 21% of the C-suite—with women of color representing only 4%.

Solutions For Governments

The private sector cannot deliver pay equality alone. Governments should lead by example and introduce comprehensive legislation to mandate pay gap disclosures and make these practices the new normal. At least ten countries have instituted gender pay transparency regulation—including the UK. For more detail on the suggested Solutions for Government, consult the full policy paper.

  1. Lead by example: Adopt and model best practice through the public sector workforce.
  2. Raise the floor: Legislate a minimum living wage.
  3. Promote pay transparency standards: Legislate to mandate data publication on wages and overall compensation.
  4. Break the mold: Legislate to prevent companies from requesting data on salary histories.
  5. Diversify roles: Invest in policies and programs that address occupational sex segregation.
  6. See the full picture: Invest in social protection, parental leave, and public services.

For more on how you can advance equality in the workplace beyond closing gender pay gaps, please see The B Team’s Principles for Equality.