Equal pay: Understanding the gender pay gap (4/8)

Summary

This video explores the importance of addressing the gender pay gap, focusing on Diageo's success in achieving an impressive 2.8% gap. It highlights how a pay gap can hinder talent acquisition and retention, with statistics showing employees’ reluctance to join companies with such disparities. The video discusses two methods for calculating the pay gap—unadjusted and adjusted—and offers strategies for companies to reduce the gap, such as implementing pay structures, increasing salary transparency, and eliminating unconscious bias in performance reviews. It emphasizes the long-term commitment needed to address gender inequality in the workplace.

Takeaways

• 😀 Diageo, a British beverage company, topped the 2020 gender equality rankings with a 2.8% gender pay gap, significantly lower than the UK average of 8%.
• 😀 Gender pay gaps in industries like finance and construction can be as high as 25–30%, which highlights the importance of addressing this issue across sectors.
• 😀 63% of employees would avoid applying to companies with a gender pay gap, and 60% of underpaid workers are likely to leave, underscoring the importance of equal pay in talent retention.
• 😀 Salary transparency has proven benefits for companies, including increased productivity, more equitable treatment, and better hiring outcomes.
• 😀 Governments have enacted laws to ensure pay equality, but the global gender pay gap persists, with the World Economic Forum estimating it will take over 200 years to close.
• 😀 Gender norms, family responsibilities, and unconscious bias in hiring and career development contribute significantly to the persistent gender pay gap.
• 😀 The unadjusted gender pay gap simply compares the income of men and women, while the adjusted gender pay gap accounts for other factors like job roles, experience, and education.
• 😀 In the case of Company A, the unadjusted pay gap was USD 10,000, but after adjusting for factors like experience and job role, the gap shrunk to USD 1,500.
• 😀 Companies with over 200 employees can use statistical analysis to calculate the adjusted gender pay gap, while smaller companies may need to use a more manual approach.
• 😀 To address the pay gap, companies can develop pay structures, improve transparency, offer leadership training to reduce unconscious bias, and promote equal career advancement opportunities.
• 😀 Diageo's commitment to gender equality has helped it become one of the world’s best workplaces and a top innovator, demonstrating the value of diversity in recruitment and company reputation.

Q & A

What is Diageo's gender pay gap and how does it compare to other companies?

Diageo, a British beverage company, has a gender pay gap of only 2.8%, which is significantly lower compared to the average gender pay gap of 8% for large companies in the UK, as of 2019. In some industries like finance and construction, the gap can be as high as 25% to 30%.

Why should companies take the gender pay gap seriously?

Companies should take the gender pay gap seriously because it affects their ability to attract and retain talent. Research shows that a majority of employees would avoid applying to companies with gender pay gaps, and employees who feel underpaid are more likely to leave.

What are the benefits of increased salary transparency?

Increased salary transparency leads to better productivity, more equitable treatment, and improved hiring practices. It helps build trust between employees and the company, contributing to a fairer work environment.

How long will it take to close the global gender pay gap at the current rate of progress?

According to the World Economic Forum, at the current pace of progress, it will take more than 200 years to close the global gender pay gap.

What are the primary causes of the gender pay gap?

The gender pay gap is caused by various factors including gender norms, family responsibilities, occupational sorting into lower-paying sectors like care work, and unconscious bias or discrimination in hiring and career development.

What is the difference between the unadjusted and adjusted gender pay gap?

The unadjusted gender pay gap compares the average earnings of men and women directly. The adjusted gender pay gap takes into account other factors, such as education, experience, job roles, and performance, to provide a more accurate picture of the gap that is actually due to gender differences.

What steps should a company take after calculating its gender pay gap?

After calculating the gender pay gap, a company should review its HR strategies, promote women into senior positions if necessary, consider sharing findings with employees for transparency, and explore actions like developing a pay structure or improving performance reviews to reduce biases.

What is the role of a pay structure in addressing the gender pay gap?

A pay structure helps establish clear salary ranges associated with each job grade or band. This reduces the role of negotiation in setting salaries, ensuring fairness, consistency, and equality, and helping to prevent claims of discrimination.

How can companies use transparency to reduce the gender pay gap?

Companies can reduce the gender pay gap by implementing full or partial transparency regarding salaries. Full transparency involves disclosing all salaries and bonuses, while partial transparency may involve sharing salary bands or categories for specific employees.

What actions can companies take to ensure fair performance reviews?

To ensure fair performance reviews, companies can train managers to recognize and resist unconscious biases, consider more frequent reviews (e.g., monthly instead of yearly), and ensure that reviews are based on objective performance metrics rather than subjective opinions.

What is the significance of Diageo's approach to gender equality in the workplace?

Diageo's commitment to gender equality has contributed to its reputation as one of the world's best workplaces and has helped the company attract a diverse talent pool. Their efforts have been recognized in their inclusion among the top 50 companies for innovation in 2020.