Following last week’s release of the Workplace Gender Equality Agency’s gender pay gap data, HRM speaks with an expert about strategies HR practitioners can adopt to help their businesses narrow the gap.

The Workplace Gender Equality Agency (WGEA) has released its latest statistics on the gender pay gap – and, while there has been improvement, Australia still has work to do to achieve equality.

In good news, more than 50 per cent of Australian businesses have reduced the gender pay gap over the past year.  However, the average gap is still significant, at 21.8 per cent. This means that, for every $1 a man earns, a woman earns just $0.78.

For HR practitioners, the big question is: what happens next? What can we do within our businesses to ensure that we’re pulling on the right levers to narrow the gap in our organisations?

Below, Vanessa Paterson, CEO and Principal Consultant at Checksfield Consulting, Consultant with Diversity Partners, and former executive manager at WGEA, shares strategies that HR can put into action. 

1. Collect the right data by asking the right questions

The gender pay gap is a proxy for gender equality in the business – or the lack thereof, says Paterson.

“It’s important to dig deep into the data to find out what’s going on – to find out, not just what the gap is, but why the gap is there.”

Collecting helpful data requires asking the right questions. A good place to start is targeting the known causes of the gender pay gap, which, according to the WGEA, include: 

• Discrimination and bias in hiring and pay;
• Women working part-time; 
• A lack of flexibility, particularly in highly paid roles; and
• Women spending time out of the workforce, often due to caring responsibilities.

However, the extent to which these factors influence the gender pay gap varies across businesses. To identify the most relevant factors, HR should consider the following questions:

• What is the gender make-up of hiring panels?
• Are there any gender-based recruitment and/or promotion gaps? If so, where are they? 
• Do any highly paid employees work part-time? Or is it expected that highly paid employees must be full-time? 
• Do highly paid employees have access to flexible working arrangements? 
• Does spending time out of the workforce, such as during parental leave, negatively affect an employee’s ability to gain a promotion and/or pay rise?
• Do employment satisfaction surveys indicate any differences based on gender? 
• Is there a high rate of female turnover in particular roles? 

Uncovering the right data puts businesses in a strong position to adopt bespoke strategies to address the gender pay gap effectively. 

“For example, a business might find it’s limiting highly paid roles to employees who work full-time,” says Paterson. “This suggests to employees that, if someone has caring responsibilities or wants to focus on other elements in their life, then they won’t be welcome to a promotion, because the business won’t provide any adjustment.”

“Women who leave mid-career create a leaky bucket – the business has spent all this money, time and resources in developing them, only to lose them.” – Vanessa Paterson, CEO and Principal Consultant at Checksfield Consulting

2. Address gender-based bias in recruitment, development and promotion processes 

Most businesses will find that gender-based bias occurs at some point – or points – in the recruitment, development and promotion processes. 

The first step is determining exactly where these points lie, which requires rigorous data collection. Paterson suggests asking:

• How many men and women are applying and being interviewed, shortlisted and/or appointed for roles?
• How do men and women compare when it comes to performance ratings?
• How many men and women are being offered development opportunities? 
• How many men and women are receiving promotions?

Should the business find discrepancies at any point, then it should then investigate if there are any gender bias present in this specific area, rather than offering generalised annual or ad hoc training. 

“It’s important to develop policies and processes that address specific implicit and explicit biases, and include guardrails,” says Paterson.

“The aim isn’t necessarily about eliminating bias – the research suggests that might not even be possible,” says Paterson. “Rather, reducing bias is key – and it’s also more achievable in employers’ eyes.” 

Policies and processes should be as prescriptive as possible, outlining exactly what hiring managers need to do. 

Strategies that might be employed include:

• Adopting highly structured interviews, during which each candidate answers the same questions and the hiring panel uses a scorecard to assess responses.
• Ensuring that performance reviews are consistent for men and women, highly structured and contain actionable feedback directly linked to goals. A 2016 study by Stanford University’s Clayman Institute for Gender Research found that 57 per cent of women received vague feedback, in comparison with 43 per cent of men, and that this was found to hinder women’s development.
• Ensuring a high level of accountability for promotions.

One workplace where a change in culture has worked is IKEA, which has reduced its pay gap to 3.5 per cent, and has women in 50.2 per cent of its management roles. It has done so by creating a workplace that’s not just inclusive, but specifically inclusive for families. 

Under IKEA’s Workplace Action Plan, both women and men have flexible working arrangements, enabling people of all genders to help with caring. These arrangements empower employees to manage hours, start and finish times, work patterns and changes in location. 

Further, all retail store co-workers have the option of a fixed roster, which increases predictability, thereby helping them to meet caring responsibilities outside of work.  

In addition, employees of all genders are entitled to 26 weeks’ paid parental leave (including super) from the first day of employment. Plus, IKEA also offers grandparents’ leave.

3. Change work conditions and culture to keep women on board

Once strategies are in place to decrease bias in recruitment, development and promotion processes, the next step is ensuring that women are retained.

This calls for a multifaceted approach to evolving work conditions and culture, acknowledging that women – who often take on a greater share of caring responsibilities – may benefit from tailored adjustments.

Ideally, these innovations could include:

• Creating pathways for part-time employees to progress into highly paid roles;
• Offering flexible working arrangements to all employees, include those in highly paid roles;
• Providing parental leave to both women and men; 
• Ensuring that parental leave doesn’t create barriers to promotions and pay rises; and
• Managing any change to minimise opposition in the workplace. 

Taking steps to keep women in the business isn’t just important for achieving gender equality. It also makes business sense.

“Women who leave mid-career create a leaky bucket – the business has spent all this money, time and resources in developing them, only to lose them,” says Paterson. 

“You can reduce the gap [quickly] by increasing the number of men in lower paid roles, or by promoting particular women. But [this kind of ad hoc approach] doesn’t mean that structural change has occurred.” – Vanessa Paterson, CEO and Principal Consultant at Checksfield Consulting

4. Take a long-term approach to the gender pay gap

Perhaps surprisingly, the gender pay gap must sometimes get worse before it gets better. 

“It can be tempting for employers to implement short-term strategies, or, even worse, take actions that reduce the gender pay gap but then have worse long-term consequences for the gap, and for women in the organisation,” says Paterson. 

“For example, you can reduce the gap [quickly] by increasing the number of men in lower paid roles, or by promoting particular women. But [this kind of ad hoc approach] doesn’t mean that structural change has occurred.”

Instead, businesses should think long term. What this looks like depends on the business and the industry.

“For example, you might be in an industry, such as engineering, that has traditionally been male-dominated, where the number of female STEM graduates is low,” says Paterson.

It makes sense for such a business to focus on attracting more women at entry level. In the short term, this could widen the gender pay gap by putting more women on lower wages. 

“However, over time, as the business supports these women to develop, their careers will progress,” says Paterson. “They’ll then move into higher paid roles, in specialties or management – which will lead to a narrowing of the gap that’s sustainable for the women and the business.”

Achieving gender pay equity is a long-term endeavour that requires sustained commitment and strategic action. While progress has been made, significant gaps remain, underscoring the need for businesses to take a data-driven approach, address systemic biases and foster workplace cultures that support all employees equitably. 

By embedding some of the structural changes mentioned above, organisations can create meaningful and lasting progress. The challenge for HR leaders is not only to implement these strategies but to ensure they are deeply integrated into the business, driving both gender equality and organisational success.

Gain insights and strategies to transform menopause from a taboo topic into a key talent strategy at AHRI’s webinar in recognition of International Women’s Day.