Narrowing the Gender Pay Gap
by Cain Ullah, Red Badger
Not many leaders consider the gender pay gap as being a potential threat to the financial performance of their business. But the collective intelligence and motivation of your teams, is dependent on cognitive diversity and fairness. By narrowing your gender pay gap, you are able to positively impact both.
In the UK in 2019, 88% of British companies reported a mean gender pay gap that favored men. The data for any country that reports their Gender Pay Gap data follows a similar pattern.
Studies have shown that 16% of the gender pay gap is due to Personality, specifically ‘agreeableness’ versus only 13% being attributed to discrimination.
The value ‘agreeable people’ place on interpersonal relationships prevents them from demanding the rewards that create better outcomes for themselves. It’s deeply unfair but nevertheless true, that people who are friendly, compassionate and altruistic get paid less. This impacts women the most, as they’re more likely to exhibit agreeable behaviors.
Performance Factors
Ethics aside, why should I care about this, might you ask? The answer is that closing your gender pay gap will fuel your business’s performance. In order to improve the efficacy of your company, teams, and individual employees, you need to unlock employee potential, creativity and motivation. When it comes to teams, collective intelligence is a significant factor. And when it comes to individuals, personal motivation counts.
Making your company an attractive place to work for women will help you to build in diversity and an ingrained culture of fairness and thus your collective intelligence and motivation of all employees.
Collective Intelligence
Anita Wooley, Associate Professor of Organizational Behavior at Carnegie Mellon, has proven that having diverse teams in which multiple genders and cultures are represented is more important than intelligence when it comes to improving productivity and creativity. She calls this ‘collective intelligence’ (the ‘c-factor’). Wooley proved that by having slightly more women than men in a team, ethnic diversity and cognitive diversity, results in a higher c-factor.
Teams comprised of diverse employees provide the best results.
Personal Motivation
When it comes to the individual, you have to look at what personally motivates your employees. In his famous book Drive, Dan Pink proves that you have to focus on the intrinsic motivators, autonomy, mastery and purpose. However, If they feel like they’re paid unfairly, intrinsic motivators don’t work.
If you value the quality of asking for a pay rise you’re at risk of discriminating against women because women are more likely to be agreeable and less likely to ask.
This could result in your company having a large percentage of your very talented (female) employees feeling like they’re paid unfairly, thus being less motivated and doing poorer work than they’re capable of.
It makes good business sense to have policies in place to counter agreeableness being a factor in people’s pay, pay everyone fairly to allow you to attract and motivate a diverse group of employees, so you can improve your company’s performance.
Leaders Need to Step Up
Without doubt, it should not be the responsibility of women to change their behavior in order to work toward pay equality. Change to a pervasive problem across many industries and in your company will be slow, and minimal if the answer is for women to alter their behaviors, one woman at a time.
The responsibility lies not with individual women, but with leaders of all genders.
Four Tips to Get Started:
1. Break down gender stereotypes around childcare
Women’s careers are often halted when they become mothers. This can impact their whole career. To counter this, parental leave should be genderless. Give employees the option to share time off between two primary caregivers after the birth of their baby or adoption of a child.
2. Make sure your leadership is balanced
To close your gender pay gap, you need a balanced leadership team. Evidence shows that having an evenly balanced gender split at leadership level will help ensure your gender pay gap is tackled effectively. Too many men or too many women at leadership level results in a gender pay gap in favor of the dominant gender at the top.
3. Be transparent about pay
Ensure that salary bands, role definitions and expectations of each role at each level, are clearly publicized. You want to give employees the opportunity to interrogate and challenge where they sit in the salary bands within the context of what is expected of them and the value they bring.
At all times, you as a company also want to be able to justify where someone sits and the value they bring.
4. Continuously audit your processes
If you want to stop agreeableness from being a factor in people’s pay, you want to avoid a person being paid a certain amount because one leader is more generous than another or because an employee asks for a pay rise. There needs to be a calibration process across multiple leaders and as a group, the reviewers calibrate what’s fair across the full cohort of employees. They also need to be prepared to stand their ground if someone who’s currently paid fairly insists on a pay rise, even if they threaten to leave.
If every company develops meaningful policies around equality, diversity and inclusion, and eradicates their gender pay gap, our businesses will be healthier, our teams will do better work, our talent pool will flourish and our industry will be stronger. Are you in?
Cain Ullah, Red Badger