Gender pay gap reporting – moving beyond the numbers

I’m thrilled that the NZ government has mandated gender pay gap reporting for larger organisations, and even with a potential change in government this will surely be required soon given the approach of numerous other countries.  But it’s not enough to simply calculate and report your numbers. Organisations need to carefully plan communication with their people and focus on fixing the root causes underlying discrepancies in gender pay.

This can be a challenging and emotive space for businesses to navigate and planning to introduce reporting is just the beginning! With extensive experience in addressing gender pay gaps, I have set out eight crucial areas that organisations should carefully consider throughout their journey.

1. Be considered in choosing your calculation methodology

Spoiler alert; there is more than one way to calculate the gender pay gap!  And within each methodology there are more complexities and choices to be made.  You’ll need to set aside time to decide what’s right for your organisation, ensuring your method is robust and connects with other gender diversity initiatives you have underway.

Action: Choose your calculation methodology carefully and ensure that you have a solid understanding of how it works so you can articulate it clearly in your communication plan.

2. Build a clear communications plan, prioritising people

If this is the first time you’ve communicated your gender pay gap, your people will have a lot of questions!  And not just women, but people of all genders as well as leaders managing diverse teams.  As a general rule, I’m a big fan of these three principles: a) be as open and transparent as you can, b) lead from the top (that’s your CEO, not your HR Director!) and c) always communicate with your people first.

Action: Put aside considerable time to build your communication plan, including the key messages and channels you’ll use – from company-wide announcements to speaking with people one-on-one.

3. Build capability among your leaders

Once you have your communication plan, you’ll need to arm your leaders with the answers to the plethora of questions that will come up, from “how much have I been underpaid and will you be calculating back-pay?” to “how long has this been going on for and why are others getting adjustments and not me?”.

Action: Thoroughly brief leaders at all levels of your organisation to help them navigate these challenging conversations.  Your leaders will have questions too so ensure you answer them by looking at the data across their teams.

4. Address your underlying organisational culture

Pay gaps are complex. Interestingly, most aren’t driven by ‘unexplained’ factors like bias and gender differences in choices and behaviours (source: Ministry for Women). To unveil the core issues you’ll need to dig deep into your culture, utilising a range of strategies including speaking with your people in an open and trusting environment, looking at what your business decisions tell you about the psychological safety in your teams, and mining for insights such as themes/comments revealed in culture surveys.

Action: Changing culture is complex and takes time so it’s important that you support your ambition with a clear plan.  You may need to pull several levers at once, including bias training, changing policies and processes, ensuring leaders are role-modelling inclusive behaviours, and maybe even reviewing your values! 

5. Address potential workplace practices perpetuating the gap

Gender bias can creep into our policies and processes in numerous ways.  You’ll need to thoroughly review your practices to identify the patterns that could be contributing to your gap, and systematically put changes in place to address them.  A great place to start is in your HR department – reviewing recruitment practices, talent planning, performance reviews and even your approach to flexible working.

Action:  There are a wide range of changes you can make to workplace practices that will have a real impact. These processes are often very rich in data, giving you the opportunity to test and learn first to see what makes the biggest difference.  I have significant expertise in building inclusive cultures and adjusting processes and policies to help close gaps, so please reach out if I can help.

6. Budget for funds to close the gap into the future

Let’s face it – closing a gender pay gap, especially a large one, can be expensive.  And your culture and process changes will take time to really bed down.  Once your organisation has a confirmed approach, it’s critical to ring-fence some money in future budgets to make one-off adjustments to close, or help close, the gap.

Action: Find out when your annual budget rounds happen and spend time with your Finance team to get ahead of the curve, ensuring you have the funds to support your plan now, and into the future.

7. Ensure leaders appreciate the long term commitment

Managing a gender pay gap takes consistent focus and effort right across an organisation.  Leaders need to understand that the ‘gap’ is constantly moving and every decision they make in relation to the pay of someone in their team will have an impact.

Action: Make sure your leaders appreciate the important role they play in pay decisions and ensure they champion the process changes that will be implemented.

8. Introduce clear and regular reporting, and share it

Ideally you should support your annual external reporting with more regular internal reporting so you can spot trends early.  I’ve found that clear and concise six-monthly reporting on the key points at which the gender pay gap is impacted, split by gender and function, is ideal.

Action: Turn a potentially complex space into a simple one – breaking it down so people can see how they influence it.  Also remember to continually reinforce regular reporting with your leaders to ensure it’s always top of mind.