In the UK, the recent reporting requirements laid out in black and white the scale of the gender pay gap. According to the first UK Gender Pay Gap report, over three quarters of UK businesses have gaps in favour of men and there is no sector where women are paid more. But, it’s not just a UK issue. In the US, for example, there is just one profession (wholesale/retail buyer) where women earn more than men.
This isn’t just unfair, I believe closing the gap is a business imperative. Lack of diversity and equality impacts business competitiveness as well as the economy (it’s estimated that closing the gap could boost earnings by as much as £90 billion a year in the UK and $800 billion in the US). Having an employee profile that is gender-balanced is crucial to accessing a wider, more diverse range of skills and driving innovation. And, this is particularly the case at senior levels as it leads to enhanced management of risk and better decision-making.
According to the UK’s Office of National Statistics the gap hasn’t closed substantially in the last 15 years – the obvious explanations such as age, location or working pattern only account for a third of the gap. If historic trends continue, the UK won’t close the gap for another 50 years while in Germany, it will take another 300 years. Why is it proving so hard to close?
THE IMPACT OF CULTURE ON PAY EQUALITY
The clear reason for the gender pay gap is the larger proportion of men in high-earning positions, while the causes are down to cultural bias impacting on talent management decisions. This is borne out in our own survey of 1,000 UK financial sector employees. When asked to rank the leadership traits the organisation valued and rewarded most, both male and female respondents highlighted traits that they themselves identified as “masculine” such as assertiveness, competitiveness and confidence ahead of those they identified as “feminine” including empathy and compassion. This potentially means that recruitment, promotion and reward decisions are biased in favour of those with masculine characteristics, resulting in leadership teams lacking balance both in terms of gender representation and leadership style.
Our research also found that despite the fact that in the UK the largest gap in gender pay is apparent in the financial sector, 72% of men and 68% of women surveyed still believed that people succeeded on merit within their organisation. This figure rises to 93% for men in senior management, which suggests to me that those with the most power to influence and drive change are the least likely to acknowledge the severity of the problem.
This apparent contradiction throws into sharp relief the profound impact of culture which largely remains unconscious. Unless steps are taken to make the influence culture has on talent management decisions tangible and quantifiable, permanently closing the gender pay gap will remain an intractable problem.
DON’T JUST MIND THE GAP, CLOSE THE GAP
Given the cultural factors driving the gender pay gap, simply imposing quotas is the very definition of treating the symptoms rather than the cause. I passionately believe what’s needed is cultural change. And, in order to inform this change, we need to first measure culture as expressed through shared behaviours and assumptions. Then put interventions in place to drive a continuous cycle of improvement. Every company is different, but based on our research and further analysis I believe organisations need to focus on seven areas to close the gap:
1. Develop a common understanding of the need for change
For cultural change to be sustainable it has to be rooted in a shared recognition of the problem itself and the need to address it. Organisations must develop a fuller understanding of the cultural factors at play and involve everyone in the solution. This requires gathering hard data on employee assumptions and behaviours at all levels through culture assessments and audits that raise awareness of the scale of the problem and help to form a shared commitment to act.
2. Constantly scrutinise talent management processes and decisions
Making the comfortable assumption that the decisions taken within your organisation in key areas such as recruitment, performance management and promotion are fair and meritocratic will inevitably lead to complacency. This complacency allows underlying assumptions and cultural biases to influence talent decisions in a way that undermines fairness and objectivity. Continuously assessing impact of talent management processes and the experiences of potential and existing staff will help to identify areas of concern and improvement interventions. For example, our research shows that women are more likely to self-select out of applying for promotion than men. This highlights the likely need for greater scrutiny of job descriptions and materials related to advertising posts both in terms of content and tone.
3. Ensure you have self-awareness at senior levels
As our research shows, despite the yawning pay gap within the UK financial sector, senior managers are still reluctant to acknowledge that there is a problem. This means that those with the greatest power and responsibility for driving change are the least likely to feel the need to do so. While we believe there is a desire at the highest levels to address the problem of gender pay disparity, it is at management levels immediately below the executive that levels of complacency are at their highest. Furthermore, research has shown that the more power leaders attain, the more likely they are to display characteristics such as self-assurance and confidence to the detriment of traits such as empathy and compassion. The good news is that this tendency can be countered through interventions such as executive coaching.
4. Develop evidence-based interventions, not just quotas
Quota and target-setting are a means of measuring progress but do little to inform sustainable change. While generic training can have an impact, to drive the real progress that is needed organisations have to adopt a much more targeted approach based on hard evidence. This means combining structural population data (e.g. what % of my senior managers are female?) with cultural insights (e.g. women feel less confident in their degree of “fit” with senior management culture). Equipped with this insight, organisations can then derive targeted interventions that match their business and its specific needs.
5. Enforce structure around recruitment and promotion practice
Given the scale of the issue with unconscious cultural bias, organisations need to have strong processes in place across the organisation when it comes to recruitment, promotion and performance management. This needs to be enforced rigorously, reinforced with training so that they become the cultural norm. Relying on informal and unstructured recruitment and assessment procedures is a major source of bias. Therefore, there is no substitute for structured, skills-based assessments to inform recruitment and promotion decisions. The fact that fewer than 20% of unsuccessful candidates for promotion in our research reported receiving constructive feedback regarding their applications also highlights the need to ensure that simple and obvious best practice is being followed.
6. Provide support through mentoring and sponsorship
Our research shows that decisions made by individuals about their own careers can have as much impact as those made about them. A prime example of this is the greater tendency for women to self-exclude from opportunities for promotion compared to their male colleagues. Targeted support for individuals and groups through mentoring and sponsorship can increase confidence and provide a sounding-board for women looking to advance their careers.
7. Develop a programme of ongoing assessment and best-practice based improvement
None of the objectives above can be achieved without a full understanding of the assumptions made by and about all of your people in relation to talent and how they impact upon behaviour. This can only be done through a comprehensive and ongoing assessment of your organisational culture. As well as supporting evidence-based decision making with regard to targeting improvement interventions, this approach is essential in identifying pockets of best-practice which can be replicated more widely.