In 2021, the gender pay gap remains a very real thing. Yes, the gap in pay between men and women has narrowed since the 1980s. But, women in 2018 needed an extra 39 days to earn the same salary as their male counterparts—in the same job. Since there are only 365 days in a year for everyone, small businesses can do their part to help close the gender pay gap.
The most recent Bureau of Labor Statistics finding had women earning 82% of what their male counterparts earned in full-time wage and salary positions in 2019. That’s a jump from 1979, when the first gendered earnings data was available. Women’s earnings then were 62% of men’s. Plus, in a recent Pew Research Center analysis, young adults are closer to gender parity, with women ages 25 to 34 earning 89 cents for every dollar men in the same age group make.
Yet, gender discrimination remains an issue. Family caregiving responsibilities and career interruptions impact long-term earnings as well. That was true even before the COVID-19 pandemic, which reversed many recent employment gains for women.
So, what can your small business do to help eliminate the gender pay gap? These strategies can make a difference:
- Audit pay
- Review hiring practices
- Ensure promotion fairness
- Embrace transparency
- Train managers
- Offer pandemic support
The first step is always awareness. To address the problem of pay inequity, you first need to analyze what your people are paid. Analyze compensation by both gender and race.
Be sure to consider all forms of compensation too. Salary may not be the only area of discrepancy. Do different groups get higher bonuses or access to other perks that are not available to all?
Also, don’t do this once and consider yourself done. Continued vigilance to discrepancies is the only way to eradicate gender pay discrepancies for the long term.
Review Hiring Practices
The gender pay gap can start at hiring. That first salary sets the starting point for all future earnings over the individual’s career.
Don’t rely on salary history to set pay for new hires. You risk perpetuating past pay inequities. At the same time, be aware that some women and older workers are less likely to negotiate. Offer salaries that reflect the responsibilities of a role without relying on the individual advocating to achieve a certain salary.
At the same time, avoid penalizing those women who do negotiate. McKinsey & Company research of Women in the Workplace in 2018 noted, “women who negotiate are more likely than men who do to receive feedback that they are ‘intimidating,’ ‘too aggressive,’ or ‘bossy.’”
Ensure Promotion Fairness
The pay discrepancy can continue throughout a career as an individual is overlooked for promotions or not given raises. Along with auditing pay and reviewing hiring practices, revisit your procedures for evaluating and promoting employees.
Developing consistent criteria for performance reviews and staffing decisions can help reduce bias. According to MIT Management’s Sloan School, ranking employees on a scale of 1 to 5, or excellent to poor, is “a petri dish for bias.” “Global ratings are too subjective,” said Joan Williams, founding director of the Center for WorkLife Law. Managers “should have to provide enough evidence that another person reading the performance evaluation can [see] the evidence upon which the manager bases the judgement.”
Salary transparency “is a win-win for both employees and the companies they work for,” according to Glassdoor. “It leads to increased productivity, more equitable treatment and even better hiring.” Take that pay audit you did and share the results as well as any adjustments you make to create greater equity.
Being known as a business that cares about pay equity will help in hiring prospects too. A poll by an organization dedicated to equal pay, Lean In, found “75% of Americans think the gender pay gap is unfair when they know it exists.” Further, a Glassdoor survey found “the majority of employees in the seven countries surveyed (3 out of 5) would not apply for a job at a company where they believe a gender pay gap exists.”
Additionally, Lean In found, “66% of Americans are less likely to buy a product from a company that does not pay women fairly.”
It’s important that all your employees understand the impact of gender and racial bias on their decision-making. Unconscious bias training aims to help people “recognize, examine and transform unfair behaviors toward women, people of color and members of other underrepresented groups.”
The problem is that addressing the unconscious is difficult. As Training Industry notes, “genuine attitude change generally emerges from self-discovery in a non-judgmental environment, which creates an open mind and stimulates curiosity.”
Targeted employee coaching can also help address bias as it is meant to foster self-awareness.
Offer Pandemic Support
The pandemic has put fresh pressure on working women. The 2020 Women in the Workplace study found, “1 in 4 women are contemplating what many would have considered unthinkable less than a year ago: downshifting their careers or leaving the workforce.”
By investing in making your workplace more flexible and empathetic, women working a “second shift” of caring for their families and managing households can avoid interrupting their careers. Your business might:
- Change productivity expectations
- Alter the performance review process
- Add paid leave opportunities
- Provide mental health counseling
- Offer emergency loans/grants
- Support job training and re-skilling
Your Part in Closing the Gender Pay Gap
This article has focused on what a small business can do to help close the gender pay gap. At the same time, there is a deep racial pay gap to address too. Many of the strategies mentioned can impact that as well. Ultimately, it takes intentional effort, but it is worth it to take practical steps to bring equity to the workplace.
Closing a pay gap is good for the bottom line in the long term. It helps your business attract and retain top talent, improve employee engagement, and make an organization diverse and inclusive too.