The Gender Pay Gap: keeping the big picture in mind
“Closing the gender pay gap is important for Australia's economic future and reflects our aspiration to be an equal and fair society for all.”
Workplace Gender Equality Agency
Many organisations will be trying to explain and perhaps justify their relatively slow progress, on what is a significant economic and social metric. A misunderstood metric at the best of times, it’s important to understand the Gender Pay Gap is not the same as “equal work for equal pay”, which became illegal in 1969 for some women.
The gender pay gap, however, is a measure which demonstrates the enduring position women have historically held in society, and their value in the workplace, relative to men in general. It is an important exemplar of gender equality, not least because of its significant influence on the wealth, health, empowerment and safety of Australian women - over a lifetime.
Consequently, organisations are likely to feel the pressure to jump into action, and make public statements reminiscent of the Black Lives Matter response after the death of George Floyd.
The Challenge of Wicked Problems
It’s entirely understandable given the optics of the situation, however, the Gender Pay Gap is a great example of a ‘wicked problem’.
Unfortunately, ‘[t]raditional linear processes — identifying the issue, gathering data, studying all the options, choosing one strategy — don’t work with wicked problems.’ (Camillus)
Social planning processes, in combination with robust change management foundations, are more effective. Some of the common reasons 70% of corporate transformations fail, is because of a lack of aspiration and clarity about why the problem matters, together with patchy and inconsistent execution. (McKinsey). This is also known as the ‘why now and how’ approach.
Stepping Back and Reflecting on WHY NOW
In amongst the facts and stats, naming and shaming that will likely occur, leaders would do well to take a step back and reflect on why the gender pay gap matters.
Why does the Gender Pay Gap matter to your organisation, your teams, your leaders and Australian society?
As a systems thinker, I can't help but reflect on the impact this gap will have on Australia’s trust in leadership and social cohesion. Australia is on the cusp of a concerning degree of polarisation, with wellbeing at all time lows, and belonging for under-represented groups reducing, it's important we’re mindful of the significant role economic factors and wage inequality in particular play.
In Australia, 1/6 women lack economic independence; (AHRC) 55+ year old women are the demographic moving most rapidly into poverty; (Australian Census) and 23% of older women have low or no super. (KPMG) These consequences of the Gender Pay Gap alone, have become of such social significance, the government committed to significant social investments, in large part for the benefit of women, in the last 12 months.
Over the last decade, there has been a shift in the perception of the role and responsibilities organisations are expected to play in society. A shift to the stakeholder mindset, away from the shareholder mindset, is one of the reasons, WGEA requires Boards review and take action on their Gender Pay Gap data.
However the gender pay gap data as we have it today, only tells some of the story.
What does the Gender Pay Gap Data Hide?
We know intersectionality plays a big role in creating, but also masking disadvantage, in society and in the workplace. And so it is that I would urge organisations to give consideration to the hidden aspects of today’s data.
WGEA are currently working on a recommended data set for the future collection of cultural demographics, and when the capture of this data is legislated, we will have a better understanding of the challenges faced by those from culturally diverse backgrounds. In the interim, however, there are a few sources of data which give us a view of the situation. The Governance Institute’s 2023 Board Diversity Report confirms only 10% of Board Directors are from non-AngloCeltic backgrounds, whilst The Victorian Commission for Gender Equality found 3 of the 4 largest pay gaps were for First Nations Women, culturally and racially marginalised (CARM) women and people from the trans, non-binary and gender diverse communities, some of whom will identify as women.
If your organisation doesn’t yet collect cultural data or other aspects of identity, there may be some interim proxies such as home postcode, or name, which will enable you to get a sense of the untold story in your organisation.
The Impact of Intersectionality
Source: The Government of Canada
Moving Forward
Having established the Why Now, let’s explore the How.
WGEA recommend the evidence based approaches in the graphic below to solve 3 of the most significant challenges organisations experience; Gender Discrimination, Gender Segregation and Job Type and Workforce Participation due to Family and Caring Responsibilities.
Which of these evidence based actions are strengths in your organisation and which might you explore further in future?
WGEA’s recommended actions to effect change
Wicked problems particularly benefit from social planning and a conscious change management approach. Crowd sourcing solutions is a form of social planning which offers several advantages. Your people will likely have insights about contributing factors which may not be evident to HR or leaders. It also has the added benefit of creating ownership and commitment for outcomes.
Are there any Quick Wins?
We know a key element of momentum in any change program is to demonstrate progress and consistent execution over time. Whilst organisations must not shy away from addressing the longer term systemic issues, so-called ‘quick wins’, maintains enthusiasm and engagement.
In my experience, there are a few initiatives from the list above which most Australian organisations could benefit from deploying as quick wins: everyday sexism; flexibility and care; unconscious bias; pay transparency and configuration, particularly in the area of bonus payments.
The Respect @ Work and Psychosocial Safety legislation offer an opportunity to reinforce the everyday sexism agenda.
Flexibility and hybrid work, would benefit from a data driven discussion about the merits of flexibility for minority groups, who are the key drivers of diversity driven performance. Elder care is a further opportunity to support women, to whom the greatest burden is falling, in part because of the government’s desire for older people to remain in their homes for longer.
Unconscious bias training has generated limited progress. There are other forms of training, however, which in conjunction with a larger change program, deliver tangible diversity dividends.
Lastly, pay transparency breeds trust and accountability. Bonus payments as an element of total remuneration, highlight the challenge of assessing performance and potential based on outdated notions of ‘confidence equalling competence’, and as evidence of ‘leadership capability’.
Bonus Payments: an invisible indicator of a vicious circle
Bonus payments are typically a ‘lag indicator’ of performance, which invisibly perpetuate gender equity in the workplace.
Below are a few questions organisations may find helpful to unpack this gritty challenge:
Whose performance is perceived to be the highest?
What stereotypes may be contributing to assessments of performance or leadership potential (where the highest bonuses are typically paid)?
eg. extraverted assertiveness (frequently a caucasian male disposition), is a common proxy for perceived performance and leadership capability.
Does your organisation embrace transferable skills based performance / potential assessments, in addition to traditional achievement / goal based assessments?
Traditional ‘achievement’ assessments disadvantage people with CV gaps or caring responsibilities, usually women.
Are you measuring what you’re managing at all levels and across all business units?
what accountability metrics do you have in place?
what weight do they carry?
how are they encouraged and enforced?
Are you leveraging sponsors and allies?
Sponsors are critical enablers of opportunities which often surface when minority groups are not in the ‘decision making room’. Most minority groups are over-mentored and under-sponsored, which impacts their ability to attract high profile assignments, a common pathway to leadership.(Ibarra)
Where to from here?
Wicked problems benefit from a conscious change management approach, which has a compelling Why Now and clear How.
“If the WHY is powerful, the HOW is easy”
John Rohn
Boards and leadership teams which step back and pause, taking the time to align systems and structures, enable mindsets and skillsets, and remove barriers, are more likely to make sustainable progress which will benefit a majority of Australians and society as a whole.
Not only will your organisation’s performance benefit, it will also increase trust and social cohesion, reduce potential polarisation and support Australia’s social fabric which has been the envy of the world.