“Unless you do an analysis of the current state of the organisation, you will not be able to make meaningful changes. Research first, then you can build targeted plans around it.”
Susan Doughty, Partner, People Advisory Services, EY
Analysing employee data is the first step
All organisations are different and may have different problems to address. Regardless of size, you need data to take action.
There are different methods for calculating gender pay gaps
Statistics NZ uses median hourly earnings to calculate the national gender pay gap. Hourly earnings allow like-for-like comparisons regardless of how many hours a person works. Statistics NZ considers median salaries provide a better measure of ‘typical’ pay.
The State Services Commission uses average annual salaries to calculate the public service gender pay gap. Averages capture the effect of higher salaries, which are more likely to be earned by men.
Whatever method you use, you need to be clear and consistent to monitor change over time.
Analysis shows where the problems lie
The causes of the gender pay gap are complex. Pay gaps emerge slowly, can occur at a range of points in the employment cycle, and accumulate over time.
Possible problems are:
• men on average receiving higher starting salaries, discretionary salaries, salary increases or performance ratings
• more men in higher levels and more women in lower levels of the organisation
• more men in the types of roles that lead to advancement
• men advancing more quickly than women
• slower career progression for employees who take care-giving breaks, or work part-time or flexibly.
What to measure
Below is a set of suggested measures. Larger organisations will be able to use all of them. Smaller organisations can focus on the organisation-wide measures and any others where there are enough staff to make useful comparisons.
An overview of what to measure
Begin with your organisation-wide pay gap
• Calculate the pay gap between all women and all men in your organisation. This could be your main benchmark for improvement.
• Look at how many men and women are employed in your organisation as a whole.
Then calculate by-level pay gaps
• If you have a number of staff in different pay bands or occupations (eg, manager), calculate the gender pay gaps in each level.
• Look at how many men and women are in each level.
• This will show where the biggest gaps are, and whether men and women are concentrated at different levels.
Calculate like-for-like pay gaps
• If you have a number of staff in comparable roles (eg, accountant) calculate the gender pay gaps for each role.
• Then calculate the gap between men and women in comparable roles who:
o are newly recruited
o work flexibly (particularly part-time) compared with those who don’t
o take parental leave compared with those who don’t.
• Look at how many men and women are in comparable roles, how many are new recruits, and how many have taken parental leave or are working flexibly.
• This shows if the gaps are in starting salaries or if they appear later, and if employees are penalised for taking breaks or working flexibly.
Explore more broadly
• Review promotion and salary progression for men and women who have worked in your organisation for some time (include breakdowns by level, and by comparable roles).
• During annual performance rounds, review performance ratings and proposed salary increases for men and women, and for part-time and full-time staff.
• Staff engagement surveys can explore perceptions of fairness.
Think about ethnicity
Many women face the combined effects of gender and ethnic pay gaps. For example, while in 2016 in New Zealand overall the median hourly earnings for European women was $23, the median hourly earnings for Māori women was $20, Pacific women received less at $18.91 per hour, and Asian women earned $20.14. Combine ethnic and gender data in your organisation to identify these types of gaps.
And think about discretionary pay and benefits
If salaries in your organisation include discretionary pay, calculate gaps using base salaries, and then the gap with discretionary pay. This will help you understand if gaps emerge in the pay-setting process.
Other actions for employers
Be aware of bias