How do we close the pay gap?

"Gender Pay” and “Age Related Pay” have all created the dreaded "GAP". Depending on which side of the wall you stand pay gaps are everywhere or only apply to those in senior positions but the common agreement is that they do exist.

The business world has evolved dramatically over the past 30 years and now businesses are reliant on technology and talent to expand into a global marketplace. Yet we are plagued by a discrepancy in how much people are rewarded for their work.

The Nordics are closest to gender pay equality with Iceland, Finland, Norway and Sweden holding the top 4 spots in the global rankings (http://reports.weforum.org/global-gender-gap-report-2016/rankings/). Retrospectively the UK ranked 20th, USA 45th and China 99th.

Every economy has improvements to make but some more than others.

The changes to age related pay gaps are also slow to come to fruition. The recent European age and employment discrimination act (http://ec.europa.eu/justice/discrimination/files/age_and_employment_en.pdf) enforces measures to remove age discrimination in the modern-day workplace. 

These changes include equal pay, working conditions and fairness in the hiring process but still allows the banding of wages for those who are classed as minors. 

What is the world doing about closing the gap in pay?

In the US, San Francisco joined New York City, Philadelphia, Delaware, Massachusetts, and Oregon have passed a law to prohibit employers to ask applicant about their salary broadly named “Parity in Pay Ordinance”.

This has been introduced to stop employers under paying new hires based on the salary from a previous employer. This change will cause employers to review salary bandings and ultimately will lead to a fairer pay for all employees regardless of age or gender.

This law has not been passed without some resistance. The challenges are not the prohibiting of asking the questions but around the feasibility for multi-state organizations who will have some employees within the scope of the new law and some who are not.

Will this fix the pay gap? No – in the short-term it won’t. But it's a positive step in the right direction, by forcing employers to offer any candidate the market rate on salary can only have a positive effect on the closing the pay gap. It’s a move in the right direction and if more cities in the US take up this law then it raises the bar for equal pay.

Another approach companies can take to close the pay gap is to manage their salary bandings. This can be done by utilising a “Total Talent Management" approach.

Outsourcing your talent sourcing function to a 3rd, party means they will advise you on salary benchmarking for new hires. This will not only assist with accurate budgeting, but this independent opinion will enable your organization to remain competitive when attracting the best talent.

What are your views on the Pay Gap?

If you would like to discuss any of the topics mentioned in this blog or find out more about Total Talent Management then please contact David Welch on 754.551.5625 or david.welch@bps-world.com. 

*This blog was originally published in August 2017*