Gender pay gap will only reduce when a firm’s culture changes

The gender pay gap in Ireland was 13.9 per cent according to Eurostat in 2014, the latest available EU data. This was less than the then EU average of 16.7 per cent. A gender pay gap should not be confused with the concept of equal pay for equal work – it is not a like-for-like comparison of men and women doing the same work.

If we put actual discrimination, which is unlawful, to one side, the most significant insight that a gender pay gap conveys is that an organisation has proportionately more men in the most highly paid jobs than women in those highly paid jobs. For individual organisations, the gap is in effect a proxy for the proportion of women in senior management positions and the terms gender pay gap and gender representation gap are largely interchangeable for these purposes.

Mandatory gender pay gap reporting for businesses is becoming more widespread. In Britain for example, businesses with over 250 employees will have to publish their gender pay gap in early April, although in the North the introduction of such legislation has been delayed by the lack of an executive at Stormont. In Ireland, the Government has committed to introducing similar legislation.

Today, young women across the EU are, on average, leaving full-time education with better qualifications than young men but a gender pay gap emerges before those women reach their mid-30s. This reflects the fact that women do not, on average, progress as far as men through the ranks of an organisations. The gender pay gap becomes wider with age. Women frequently decide to leave paid employment to take care of children and/or dependent family members and, when they do not withdraw from the labour market entirely, they often accept lower-qualified positions to accommodate their personal responsibilities upon their return to work. That is the “care penalty” and it is a significant source of gender imbalance, alongside the familiar issues of unconscious bias and discrimination.

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Drivers of change

In isolation, gender pay gap reporting is unlikely to change the pay/representation imbalance at the senior levels. However, measurement and reporting are key drivers of change in most organisations and gender pay reporting could help drive a greater sense of urgency.

It is worth noting that a large number of businesses in Ireland, North and South, including my own organisation, KPMG, are already fully engaged in seeking to reduce the gender pay gap by implementing targeted policies. Gender parity is a strategic imperative for business, and to be successful in delivering on that strategic imperative, business leaders need ownership and sponsorship from boards, which are still mainly comprised of men, and more particularly among their executive management teams, which are even more proportionately dominated by men.

One specific initiative that will bear fruit is the introduction and effective implementation of intelligent work arrangements such as work-life balance policies. This is not necessarily fewer hours, but rather flexibility in how and where the hours are worked.

Intelligent work arrangements are a necessary condition for reducing the gap. A better work-life balance increases opportunities and removes barriers to accessing higher-paid positions. Managing the numerous commitments of work and life is a growing challenge for all of us, regardless of gender.

Working from home

Businesses need to recognise and respond to those challenges and embrace a more intelligent approach to work – with the options available adapting to an individual’s stage of personal and career development. The policies that can be adopted include core hours; working from home; leaves of absence/career breaks; and reduced hours prior to/after a period of leave.

Businesses also need formal thoughtful supports for their teams before and after a period of extended leave and need to offer an opportunity to ramp down work commitments if personal circumstances demand it and then ramp back up again when personal circumstances change.

Business leaders need to create the culture to make this happen. None of these policies is easy or free to implement, but they have the potential to make a significant positive difference. Of course, there are lots of other policy initiatives such as unconscious bias training, mentoring, networking and sponsoring that can make a difference, but if organisations do not change or adapt their culture and effectively implement intelligent work-life balance policies, progress will continue to be slow.

Shaun Murphy is managing partner of KPMG