Where the gender pay gap reporting falls short (and how to avoid issues)

While the introduction of gender pay gap reporting is a great step towards transparency and accountability within organisations, there are concerns that this initiative could create tension.

The Workplace Gender Equality Agency’s (WGEA) pay gap reporting serves as a catalyst for change. However, it will not actually change anything if employers aren’t willing to utilise the data.

“Awareness is always the first step in driving change, and reporting on the gender pay gap helps us understand where those gaps lie, but knowing is only half the battle. We’ve seen an improvement in equal pay for both genders doing similar roles, with updates to pay transparency and expansions of maternity leave laws and norms. This, paired with greater flexibility to “work in any way”, is a step in the right direction,” said Katherine Loranger, chief people officer at Safeguard Global.

“Yet, these reforms are not sparking enough change in workforce composition. Women right now represent about one-third of key management personnel. Without a plan of action to address gaps identified – like upskilling women and promoting leadership opportunities for all – there isn’t any real accountability. This report just becomes confirmation that there is a gap that is not being bridged.”

Leadership positions are an area that was left out of the reporting. CEO data is expected to be included but is not yet there. According to WGEA, 78 per cent of CEOs of private sector employers with 100 or more employees in Australia are male. Meanwhile, board and director pay gaps were not listed. This could be a real insight into where employers fall short.

This disparity isn’t due to a lack of ambition. According to Megan Dalla-Camina, founder and chief executive at Women Rising, women are trying to progress in their careers but are often held back.

“Recent research undertaken by Women Rising revealed that in the past 18 months, 50 per cent of women have thought about pursuing a promotion, while 44 per cent have considered asking for a pay rise and 31 per cent taking on a stretch assignment, demonstrating that many women are looking to amplify and progress their careers,” she said.

“Of the 1,200 women we surveyed, almost three-quarters of women (73 per cent) said they need good pay to thrive. However, confidence held many back, with 39 per cent reluctant to ask for a pay rise. The data is clear: women have the ambition to succeed and become the leaders of the future. They just need the opportunity to do so.”

Dalla-Camina continued: “Women Rising’s research found that around a fifth of women (22 per cent) believe gender bias has contributed to their lack of career progression. Organisations must reconsider how they bring more women through the pipeline and into management or C-suite roles.”

Another area where the reporting is lacking is in regard to small businesses. The WGEA data includes private sector companies with over 100 employees. This doesn’t account for the 97.3 per cent of Australian businesses that do not fall within this category.

Loranger stated: “The core of the Australian economy is driven by small businesses. WGEA gender pay gap report excludes data from 97.3 per cent of businesses in Australia as the survey only looks at private companies with 100 employees or more. The reality is the 27.1 per cent remuneration pay gap could be much wider.”

Aside from the reporting itself, there are issues that could arise on a more individual level. According to research from Robert Half, there are expected to be some challenges that come from the initiative:

• Forty-seven per cent of Australian workers believe increased pay transparency will lead to friction between colleagues.
• Thirty-six per cent of Gen X workers are concerned it will lead to a negative corporate culture, compared to 30 per cent of Millennials, 26 per cent of Gen Z, and 24 per cent of Baby Boomers.
• Fifty-one per cent believe it may limit negotiating power, especially when looking to recruit particular skills or wanting to reward outperforming employees.
• Thirty-six per cent worry salary transparency could lead to losing employees.

“Pay transparency can be a contentious topic, yet our research shows that many employers and employees recognise the benefits while still having some concerns,” said Nicole Gorton, director at Robert Half.

“Workers have indicated in our research that comparing their salary to that of their colleagues and perceiving unfavourable differences can create a sense of disunity, which can negatively impact their workplace culture. Workers can also fear their ability to negotiate for a salary above market rates is limited if employers have a wider status quo that needs to be adhered to.”

Gorton continued: “Our research also indicates some employers hold concerns that pay transparency can reduce their negotiation power during hiring or promotion discussions, or lead to increased turnover rate, highlighting the importance of offering market salaries.”

Getting over these challenges comes down to communication. Loranger noted that consultation in the workplace is crucial, especially when discussing potential challenges involving the WGEA gender pay gap reporting.

“Consultation gives a voice to the voiceless. We’ve seen from this report that there is little diversity in the gender of decision-makers at the companies surveyed. Without having people with varying backgrounds and experiences providing feedback on diversity, you’re unable to have a comprehensive understanding of how company policies and cultures truly impact staff,” said Loranger.

“Look for hidden biases in policies and practices to avoid disparate impact. Actively look for ways to bring people together and share ideas and experiences. Build diverse teams. In doing so, this creates a culture that promotes opportunities for growth, learning and communication. Laws can be created that mandate or encourage diversity like ‘Secure Jobs, Better Pay’, but training and upskill opportunities need to be available and offered equally as well.”

Jack Campbell

Jack is the editor at HR Leader.