Closing gender pay gaps' slidedeck for UNDP's 3rd global forum: business for gender equality

Closing gender pay gaps

Ben Frost, Korn Ferry Hay Group

November 21st 2016

© 2016 Korn Ferry. All rights reserved 2

IT ISN’T ROCKET SCIENCE,BUT IT IS SCIENCE.

Korn Ferry knows more about human performance in the workplace than any other organization.

One candidateplaced every3.5 minutes

100,000 people

developed in ourleadership programs

each month

Assessment data on

3Mprofessionals

Roots datingback to 1943

Reward data on

20M professionals

Managementdata on

114 countries

50+ books

published

Partner to 93% of

FORTUNE 100

Engagement data on

6M professionals

7,000 colleagues



Our Pay Data – Key Figures

Countries where we collect and provide pay data.

Job holders for whom we have salary data in 2016.

Organizations in our pay database worldwide

of the Fortune 500 use our pay data, and contribute to our database.

Job holders for whom we have gender (as well as salary) data.

Countries in our most recent analysis of the gender pay gap

Headline gender pay gap in the average country.

110+ 70%

20m+ 9m+

33 17.6%

25,000


Comparing people at the same level, average gap is

6.5%

What does our data say?

We analyzed 33 countries (small and large, emerging and mature economies, from all over the world) – covering more than 8.7 million employees (>3.3m women) where we have job, pay and gender data.

Average ‘headline’ pay gap (average female vs average male salary) is

17.6%

Comparing people at the same level and in the same company, average gap is

2.2%

Comparing people at the same level, in the same company and same function, average gap is

1.6%The trend is exactly the same for every country we analysed.



The deeper we drill into the data…

Total pay gap across all job levels Same level pay gap Same level and company pay gap Same level, company, and function pay gap

Australia

Germany

Turkey

Brazil

Russia

UK

South Africa24.9%

23.7% 25.3%

28.6%

4.5%

9.8%

2.5%

3.7%

3.3%

1.4% 8.0%

9.3%

1.4%

2.6%

0.1%

0.8%

29.8%15.3% 5.0% 1.6%

...the smaller the pay gap gets

15.1%3.6% 3.1% 3.0%

11.3% 7.1% 2.0% 0.7%


In other words – when you compare salaries for men and women doing the same jobs (same level, same function, same company), there is a negligible pay gap


Hay Group Reference level – <10 = manual; 11-14 = lower professional; 15-17 = mid professional; 18-21 = manager; 21+ = executive

This is because men and women aren’t doing jobs at the same levels and in the same functions – the distribution is very uneven.

But when you compare average salaries for men and women, there is almost a 30% gap.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Percentage of employees who are male, by job level, U.K., 2014


Companies look for a balance between:

Pay systems that enable the business to:− Recruit the right people. − Keep people in the business.− Motivate good performance.− Reward good performance.

Pay systems that are flexible enough to allow business leaders to take the pay actions they need to.

But, to do all this in a cost effective way – with a focus on the amount of reward spending, and the return this generates.

But, with enough structure and rigor to ensure equity and fairness.

What are the main challenges for companies to establish their pay structures?


How do you work with senior management to develop strategies to mitigate gender pay gaps in a company?

We encourage companies to think holistically. − This is a female representation issue as much as a pay issue – so organization and job design, talent

management, assessment and development are all part of the solution. − We need to think about them as interconnected issues (with the shared aim of helping advancement), rather

than separate things. This will help create clear and visible career paths, that are open to all.

An objective approach to selection, development and reward.− Wherever possible, companies should choose objective, data/science driven ways to make decisions, rather

than subjective decisions made by managers.− For example, defining the competencies needed to be successful in specific roles, and using assessment

tools to select candidates. This helps ensure that the best candidates are successful, and minimizes subconscious bias.

Design structures and processes to minimize the risk of bias.− Recognizing that most front line HR decisions are made by line managers, who often act “in the moment”.

So, designing away the ability for managers to make decisions that may introduce bias.− Developing organization grade structures that do not introduce bias – for example by requiring jobs to be

clearly different if they are to be in different pay grades.

A data driven approach to pay gaps− Frequent pay analysis/audits - to understand where gaps exists, whether they can be justified, and how to

address them if not.


What are the main tools used to close the pay gap between men and women in a company?

The first step is an equal pay audit, to identify and understand the reasons for pay gaps.

Then, depending on the gaps:− People doing the same job, being paid differently. ‘Equal pay’ issue.

− These cases need addressing immediately

− People doing jobs at the same level, being paid differently. ‘Equal pay for work of equal value’ issue.− Can these gaps be justified? For example, does the market supply/demand require a premium for certain jobs?

− If so, keep checking this! Pay markets change all the time, and jobs that once justified a premium may not do so forever.

− If there is no justification based on the market, gaps need to be addressed.

− Overall, the fact that men earn less than women on average. ‘Gender pay gap’ issue.− We see this as a “representation” issue (fewer women at senior levels and in high paying functions).− We help organizations review policies to ensure they have a level playing field in recruitment, assessment, high

potential identification, promotion, development and reward. − We help organizations develop their Employer Value Propositions (EVP) – to make them more attractive employers

to women.


What recommendations would you give to a company that has existing pay gaps?

A few headline recommendations:

Review HR policies for recruitment, promotion, development, and pay decisions – to ensure they are not unconsciously biased.− Lots of seemingly simple and unquestioned HR processes create a non-level playing field. For example,

individual salary negotiation (especially for lower level jobs) can introduce pay gaps, because men are more likely to negotiate. Or, job descriptions that outline the ‘ideal’ rather than ‘realistic’ candidate, may discourage women from applying.

Take steps to understand why there are fewer women at senior levels, and what can be done to remove blocks to female advancement.− Men and women graduate from university and enter professional careers in roughly equal numbers. But

women do not reach senior management in anything like the same numbers as men. Why? Where do women stall in their advancement? And why is that?

Be open in communication – show good intentions to close pay gaps that exist today; and show commitment to introduce policies that ensure fairness and prevent bias.


Presentations & Public Speaking

Closing gender pay gaps' slidedeck for UNDP's 3rd global forum: business for gender equality