While we often think of closing the pay gap as being first and foremost beneficial to workers, doing so can also help companies value and retain their employee’s overtime — making this effort mutually beneficial.
Here are some concrete steps businesses can take to close their existing pay gaps.
Stop Asking About Salary History When Hiring
If you’ve ever interviewed for a job, you may have been asked to provide a salary history. However, some states have already banned this practice, as it has been shown to potentially justify offering employees salaries below the industry average and below what their skillset would otherwise command.
How effective have these bans on using salary history during the hiring process been? As Newsweek reports, women have experienced pay increases of eight percent in the wake of these changes.
Setting new hires’ salaries based on their historical payment can allow these inequities to flourish over workers’ careers, whereas setting wages based on factors like skills and experience can help establish a fairer precedent — particularly for members of groups that have been historically underpaid in the job market.
Execute a Pay Equity Audit
Before an organization can make moves to close a potential pay gap, decision-makers must know exactly where the company stands in terms of equity. A Pay Equity Audit (PEA) compares employees’ earnings — while taking into account a wide range of factors like experience and performance — then drills down to understand why any differences are occurring. Businesses can then make targeted corrections to any inequities uncovered during this process.
This might sound like something that should be occurring regularly in the workplace already. However, according to a survey of more than 900 major public U.S. companies cited by Harvard Business Review, just slightly more than one-fifth of respondents (22 percent) said they had performed an audit within the last five or so years. This speaks to an ongoing need for enterprises to prioritize the PEA as a tool for closing pay disparities.
Offer Employees Paid Parental Leave
One major contributing factor to the gendered pay gap is the so-called “motherhood penalty,” in which women are professionally and financially penalized for needing to balance motherhood with career duties. Here are a few ways the motherhood penalty manifests today:
- Employers often view mothers as less competent/committed to their work.
- Employers may judge or punish mothers for needing flexibility in their schedules or time off from work.
- Women are sometimes pushed out of jobs due to pregnancy or family obligations.
Discrimination against working mothers can contribute to a range of effects that perpetuate the pay gap — from getting passed over for promotions and opportunities (regardless of skillset and experience) to having to leave their careers outright. Ultimately, women experience a pay cut of four percent per child, while men experience a six-percent increase.
One thing employers can do to reduce this pressure is offer paid parental leave to all employees, regardless of gender. In addition to allowing employees to take necessary time off following the addition of a child, it also makes taking said time off normal across the board — ideally reducing biases previously held against mothers who have traditionally borne the brunt of the responsibility of childcare.
Hiring without factoring in salary history, conducting a pay equity audit and improving parental leave so as to avoid penalizing mothers are just some of the things companies today can do to eliminate their pay gaps for the good of all. Not only is this the right thing to do, but it can also help create a stronger company culture and reduce turnover — which in turn can help attract competitive hires who have heard positive things about how the company treats its workforce.