The PeopleAlchemist Edit: change & transformation, business & lifestyle experimentation for TheWomanAlchemist
Is the Gender Pay Gap less of a gap now? Or is it growing? The global gender gap between women and men has widened since 2020. International organisations attributed this to the more significant impact of the Covid-19 pandemic on women than men. The Covid-19 pandemic impacted women more severely than men by stay-at-home orders disproportionately affecting women and minorities.
The Gender pay Gap reporting is again around the corner (4 April – UK), and transparency is often quoted as a remedy for persistent pay inequity and inequality. In one of my previous blogs, I advocated for women to push companies to adopt pay transparency, amongst other things; I have always believed in taking personal responsibility for the change we seek.
However, it has consequences and is not as simple as people may think.
To start with, while inequity and inequality are terms used interchangeably, there is a difference:
- Equity is the fairness in pay allocation, measured by the consistency and objectivity of pay matched to performance or effort
- Equality is the variance of pay within an organisation. While studies show that inequity is reducing, inequality instead is growing.
Businesses are, however, reluctant to disclose pay. So a couple of questions come to mind:
- What if all pay was transparent? And, most importantly
- Is pay transparency worth it?
TAKING ACTION: IS PAY TRANSPARENCY WORTH IT?
The answer is more complex than one would wish.
Although pay inequality is centred mainly around the gender pay gap – if we can see how much people get, we can see where the imbalances are – it is ultimately about fairness across the workforce which then drives the individual to negotiate fair compensation and urges employers to develop adequate pay allocation systems.
So eventually, we end up with a more equitable system. But transparency complicates linking pay to performance, mainly when performance needs to be more precise, better measured or transparent.
On the one hand, fairness and perception of fairness can lead to higher employee engagement and productivity.
On the other hand, it can also lead to people observing what they perceive as inequity and then leaving, reducing their effort, or protesting for change.
There is a reason why most corporations have chosen not to go with radical pay transparency.
It is not so they can continue to discriminate but because, if they start being transparent about pay, they need to get everything else right too, including a fair pay system and a concrete way of measuring performance that we know organisations find difficult to do because it opens the infamous pandora box.
They recognise the tangible costs of losing people and compromising their ability to reward and motivate them.
So what is the answer?
Ultimately it depends on how vital pay for performance is in a business.
If it is not all that important, then there is no trade-off in being transparent.
If, on the other hand, you are in an environment where pay for performance is essential, and performance is not highly visible to anybody else, then you may make a different choice.
What do you think? Has your business implemented full-blown pay transparency? Did it work?
Please do share, and let’s start talking.