Closing the Gender Pay Gap: A Strategic and Operational Advantage

Gender Pay Gap

This article was updated on July 17, 2018.

Would your organization invest $3 million to adjust pay and attempt to close an identified gender pay gap? According to Fortune, Salesforce recently did just that. The organization is committed to growing by attracting the best tech talent, and they have made it abundantly clear to top female talent that their organization prioritizes a level playing field.

Closing the gender pay gap has become an imperative for organizations around the globe. And there's good reason why. The primary reason millennial women leave an organization is pay, and women are even more likely to leave an organization because of compensation than men, according to the International Consortium for Executive Development Research (ICEDR).

3 Reasons to Close the Pay Gap

1. Compliance

A number of equal pay laws have been enacted prohibiting pay gaps based on gender. Under the federal Equal Pay Act (EPA), men and women must be paid equally for substantially equal work at the same workplace, according to the Equal Employment Opportunity Commission. It's job responsibility, not job titles, that determines whether jobs are substantially equal under the EPA.

As more states — including California, Maryland and Massachusetts — pass laws and focus on pay equity, your compliance costs could increase if you are sued and are found to have violated the law. Tackling the issue proactively can save you from legal problems now and later down the road.

2. Employee Engagement

Employees and candidates alike may see an organization's commitment to ensuring equal pay as a fairness issue that aligns with their own values. According to Glassdoor, a not surprisingly 93 percent of American employees believe men and women should be compensated equally for their work. And 55 percent of men and 81 percent of women say they wouldn't apply for a job at an organization with gender pay gaps. So when you have a real or perceived gender pay gap problem, you could also have a recruitment and engagement problem.

3. Branding

Organizations like Salesforce do a lot to make themselves attractive options for top talent, and pay equity is a big part of that. When you communicate your initiatives to achieve gender pay equity and your fair compensation philosophy, you also build your employer brand. This signals to the market of recruits that you value equality and diversity.

3 Ways to Close the Pay Gap

1. Top-Down Commitment

It starts with leadership allocating the resources and investments needed to analyze and close identified gender pay gaps. Monitor pay equity continuously and make necessary pay adjustments as gaps are identified or during your regularly scheduled performance review and merit raise processes. Leaders should also talk about why pay equity is the right thing to do, as a matter of compliance and as part of your talent strategy. Pay equity concerns should be integrated into your policies, as well, to emphasis transparency.

2. Data Capability Investments

Your organization must have the data capability to understand where it is regarding pay equity. You need to have systems that are capable of identifying pay gaps throughout your organization before you can hope to close them. Having an HCM platform in place can be the foundation of your data-driven approach, enabling you to see where you are and decide where you need to go.

3. Stay the Course

Integrate pay equity concerns into your entire employee pipeline. Perhaps you follow the lead of Salesforce and provide accelerated development or leadership programs for women. Monitor progress, keep closing pay gaps as they are identified and continuously communicate and highlight your commitment to pay equity.

You should seek to understand the why and the how of closing the gender pay gap, not only to comply with any current or future pay equity laws, but to also recruit and engage talent that is increasingly attracted to organizations who promote fair play.