What does closing your gender pay gap in a few weeks look like?


Many businesses are working towards equal gender representation and shrinking the pay gap, and some have utilised one-off payments.

In 2015 the Australian Institute of Company Directors gave the ASX200 companies a 2018 deadline to ensure 30 per cent of the boards made up of women. They failed, but not by much – 29.7 per cent of all ASX200 board positions are now made up of women, so it’s clear gender equality is on everybody’s radar.

At Energy Australia, women comprise around 40 per cent of Energy Australia’s total 2500-person workforce. On top of that, women occupy half of the 10 seats on its board. Despite this, it had stubborn problems with pay equality.

To resolve them, Energy Australia enacted a plan to reduce its gender pay gap to zero in a matter of weeks.

How the gap formed

In any individual organisation there is no simple answer to why a pay gap forms, but Rebecca Fraser, head of HR, energy and enterprise at Energy Australia, offered several reasons as to how it happened in the organisation.

“When employees commence with us there are salary bands that exist so what we find typically, and this a generalisation, is that women on commencement are less likely to negotiate a raise. This is true even throughout their employment.  

“A further component of that is, if women have been the primary carer of a child and have been away form the workplace for 12 months or more they may not have had their pay adjusted during that period,” Fraser said.

The Fair Work Ombudsman has a guide explaining other reasons why the gap and pay discrimination exist:

  • The undervaluation of skills in industries and areas where women predominate
  • Women’s lack of access to work-based training
  • Different levels of eligibility for discretionary payments, such as over-award payments, bonuses and performance pay
  • Inflexible organisational structures that restrict the employment prospects of workers with family responsibilities

The process

“For a couple of years as part of our annual reporting, through the equal opportunity agency report, we identified this persistent pay gap,” says Fraser.

“Our managing director Catherine Tanna is passionate about equality in the workforce and she said it wasn’t acceptable any longer and went to the board to obtain relevant funding that enabled us to make it happen.”

The key to closing Energy Australia’s pay gap, Fraser says, was careful planning. The company had to assess different roles for their relative grade.

“We had to come up with a methodology that was going to effectively measure and understand why the difference existed, we also needed to create internal communication about why we were doing this and how it was going to affect people.”

Tanna identified around 350 women who would receive a pay increase via a salary review and, in most cases, they also received (on average) a one-off adjustment of $3,500. On top of that, about 80 men had their pay adjusted in the same review.  In 2018, Energy Australia invested $1.2 million to close the gender pay gap. 

“When we looked across the grades we weren’t just looking at women, we were looking at equality within grades so there were the 350 women and 80 men whose pays were adjusted as a result of this exercise,” Fraser says.

Fraser explained that initially people were sceptical about the pay increases.

“Certainly there was some excitement amongst our employees but I think until people understood that we had made adjustments across the grade they were questioning whether it was just for women and how it would affect them. Now over the last 12 months it has become a very positive experience.”

Room for improvement

While the payouts and salary reviews might not have taken long to finally action, the move towards gender equality was a much longer process. First off, the company was tracking the gap for years. Secondly, the company has been reducing bias in everything from recruitment and working arrangements to succession planning and performance assessments since 2014.

And the job is not done. Energy Australia’s managing director Catherine Tanna says there was not a “mission accomplished” moment in gender equality as there was still room for improvement.

For example, men hold nine out of 10 jobs in the company’s energy function across power stations in New South Wales, Victoria and South Australia.

“Most of the roles at our energy assets, which typically offer good, well-paid jobs, are done by men,” Tanna says.

“That’s why it’s important we encourage women to join our power stations. It’s about opening opportunities for everyone, regardless of gender, background or affiliation.”

Can everyone do it?

Realistically, closing the gap won’t be possible for every business (unless you have a few million dollars set aside in the budget).

“We have a salary budget each year and this was a component that we needed to make available for this adjustment and not every business will have the same opportunity that we’ve had to make funding available,” Fraser says.

“There are other steps that companies can make to help diminish the pay gap.”

Fraser outlined these steps as:

  • Make an assessment surrounding the pay gap based on your current processes
  • Ensure all employees have the opportunity to have their pay reviewed
  • If they are on leave still give them that opportunity
  • Make a methodology to help diminish the plan
  • Communicate this plan with your teams

The hard work has been worthwhile for Energy Australia, says Fraser. “Because we went to this effort of closing the gap our employees have felt valued and we have continued to attract and retain people within our organisation.”

Adobe’s example

A few months after Energy Australia, multinational software company, Adobe cut its gender pay gap to zero in every office of every country it operates from.

In a press release, Shantanu Narayen, president and CEO of Adobe said this was a critical milestone in their ongoing commitment to providing an inclusive workplace.

“Diversity is about valuing the unique life experience that every employee brings to work every day,” Narayen says.

Adobe identified that pay parity, within its organisation, means ensuring all employees in the same job and location are paid fairly to one another, regardless of gender or ethnicity. The global pay adjustments impacted less than five per cent of Adobe employees and less than 0.2 per cent of global payroll costs.

Talking to Quartz about the pay gap reduction, executive vice president of customer and employee experience Donna Morris said it wasn’t an HR initiative, it was a company leadership initiative. She also said that you needed to have carefully documented compensation practices in place before you can even think about declaring victory.

“Do you have a way to determine the differences between different levels of jobs within the organisation? What are your practices?”

Have you got measures in place at your company to shrink the pay gap? Let us know about them in the comments below.

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Shona
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Shona

Thanks for the article Samantha. Can you shed some further light on how EA measure the pay gap? In the article you state “The company had to assess different roles for their relative grade.” I assume from this the pay gap is measured by comparing salaries for males and females in the same grades, and then averaging that number over the company? Was performance, considered?

I think you would expect to see a gap greater than 0%, even if it was low single digits and in favour of females.

Max Underhill
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Max Underhill

Some nice words but where is the methodology. Organisational and HR methodology that firstly focuses on the design and valuation of the position. Only then do we assess the individuals fit against the position and value the incumbent or applicants – whether male or female etc. it is the methodology that addresses the issue of equality.
I believe at least one organisation mentioned in the article still uses incremental pay systems – the worst form of inequality.

Skewed Priority
Guest
Skewed Priority

More than 90% of workplace fatalities are men. https://www.safeworkaustralia.gov.au/book/work-related-injury-fatalities-key-whs-statistics-australia-2018

“For example, men hold nine out of 10 jobs in the company’s energy function across power stations in New South Wales, Victoria and South Australia.”

Bit sad to prioritise upping the pay of office workers on a non-performance non-merit based system over looking at this issue.

wendy
Guest
wendy

is there any information on female/male ceo salary gaps?

Linda Norman
Guest
Linda Norman

Good article. It is not easy asking money from a Board to address a moral issue rather than one designed to increase sales! Well done!

More on HRM

What does closing your gender pay gap in a few weeks look like?


Many businesses are working towards equal gender representation and shrinking the pay gap, and some have utilised one-off payments.

In 2015 the Australian Institute of Company Directors gave the ASX200 companies a 2018 deadline to ensure 30 per cent of the boards made up of women. They failed, but not by much – 29.7 per cent of all ASX200 board positions are now made up of women, so it’s clear gender equality is on everybody’s radar.

At Energy Australia, women comprise around 40 per cent of Energy Australia’s total 2500-person workforce. On top of that, women occupy half of the 10 seats on its board. Despite this, it had stubborn problems with pay equality.

To resolve them, Energy Australia enacted a plan to reduce its gender pay gap to zero in a matter of weeks.

How the gap formed

In any individual organisation there is no simple answer to why a pay gap forms, but Rebecca Fraser, head of HR, energy and enterprise at Energy Australia, offered several reasons as to how it happened in the organisation.

“When employees commence with us there are salary bands that exist so what we find typically, and this a generalisation, is that women on commencement are less likely to negotiate a raise. This is true even throughout their employment.  

“A further component of that is, if women have been the primary carer of a child and have been away form the workplace for 12 months or more they may not have had their pay adjusted during that period,” Fraser said.

The Fair Work Ombudsman has a guide explaining other reasons why the gap and pay discrimination exist:

  • The undervaluation of skills in industries and areas where women predominate
  • Women’s lack of access to work-based training
  • Different levels of eligibility for discretionary payments, such as over-award payments, bonuses and performance pay
  • Inflexible organisational structures that restrict the employment prospects of workers with family responsibilities

The process

“For a couple of years as part of our annual reporting, through the equal opportunity agency report, we identified this persistent pay gap,” says Fraser.

“Our managing director Catherine Tanna is passionate about equality in the workforce and she said it wasn’t acceptable any longer and went to the board to obtain relevant funding that enabled us to make it happen.”

The key to closing Energy Australia’s pay gap, Fraser says, was careful planning. The company had to assess different roles for their relative grade.

“We had to come up with a methodology that was going to effectively measure and understand why the difference existed, we also needed to create internal communication about why we were doing this and how it was going to affect people.”

Tanna identified around 350 women who would receive a pay increase via a salary review and, in most cases, they also received (on average) a one-off adjustment of $3,500. On top of that, about 80 men had their pay adjusted in the same review.  In 2018, Energy Australia invested $1.2 million to close the gender pay gap. 

“When we looked across the grades we weren’t just looking at women, we were looking at equality within grades so there were the 350 women and 80 men whose pays were adjusted as a result of this exercise,” Fraser says.

Fraser explained that initially people were sceptical about the pay increases.

“Certainly there was some excitement amongst our employees but I think until people understood that we had made adjustments across the grade they were questioning whether it was just for women and how it would affect them. Now over the last 12 months it has become a very positive experience.”

Room for improvement

While the payouts and salary reviews might not have taken long to finally action, the move towards gender equality was a much longer process. First off, the company was tracking the gap for years. Secondly, the company has been reducing bias in everything from recruitment and working arrangements to succession planning and performance assessments since 2014.

And the job is not done. Energy Australia’s managing director Catherine Tanna says there was not a “mission accomplished” moment in gender equality as there was still room for improvement.

For example, men hold nine out of 10 jobs in the company’s energy function across power stations in New South Wales, Victoria and South Australia.

“Most of the roles at our energy assets, which typically offer good, well-paid jobs, are done by men,” Tanna says.

“That’s why it’s important we encourage women to join our power stations. It’s about opening opportunities for everyone, regardless of gender, background or affiliation.”

Can everyone do it?

Realistically, closing the gap won’t be possible for every business (unless you have a few million dollars set aside in the budget).

“We have a salary budget each year and this was a component that we needed to make available for this adjustment and not every business will have the same opportunity that we’ve had to make funding available,” Fraser says.

“There are other steps that companies can make to help diminish the pay gap.”

Fraser outlined these steps as:

  • Make an assessment surrounding the pay gap based on your current processes
  • Ensure all employees have the opportunity to have their pay reviewed
  • If they are on leave still give them that opportunity
  • Make a methodology to help diminish the plan
  • Communicate this plan with your teams

The hard work has been worthwhile for Energy Australia, says Fraser. “Because we went to this effort of closing the gap our employees have felt valued and we have continued to attract and retain people within our organisation.”

Adobe’s example

A few months after Energy Australia, multinational software company, Adobe cut its gender pay gap to zero in every office of every country it operates from.

In a press release, Shantanu Narayen, president and CEO of Adobe said this was a critical milestone in their ongoing commitment to providing an inclusive workplace.

“Diversity is about valuing the unique life experience that every employee brings to work every day,” Narayen says.

Adobe identified that pay parity, within its organisation, means ensuring all employees in the same job and location are paid fairly to one another, regardless of gender or ethnicity. The global pay adjustments impacted less than five per cent of Adobe employees and less than 0.2 per cent of global payroll costs.

Talking to Quartz about the pay gap reduction, executive vice president of customer and employee experience Donna Morris said it wasn’t an HR initiative, it was a company leadership initiative. She also said that you needed to have carefully documented compensation practices in place before you can even think about declaring victory.

“Do you have a way to determine the differences between different levels of jobs within the organisation? What are your practices?”

Have you got measures in place at your company to shrink the pay gap? Let us know about them in the comments below.

5
Leave a reply

avatar
500
  Subscribe to receive comments  
Notify me of
Shona
Guest
Shona

Thanks for the article Samantha. Can you shed some further light on how EA measure the pay gap? In the article you state “The company had to assess different roles for their relative grade.” I assume from this the pay gap is measured by comparing salaries for males and females in the same grades, and then averaging that number over the company? Was performance, considered?

I think you would expect to see a gap greater than 0%, even if it was low single digits and in favour of females.

Max Underhill
Guest
Max Underhill

Some nice words but where is the methodology. Organisational and HR methodology that firstly focuses on the design and valuation of the position. Only then do we assess the individuals fit against the position and value the incumbent or applicants – whether male or female etc. it is the methodology that addresses the issue of equality.
I believe at least one organisation mentioned in the article still uses incremental pay systems – the worst form of inequality.

Skewed Priority
Guest
Skewed Priority

More than 90% of workplace fatalities are men. https://www.safeworkaustralia.gov.au/book/work-related-injury-fatalities-key-whs-statistics-australia-2018

“For example, men hold nine out of 10 jobs in the company’s energy function across power stations in New South Wales, Victoria and South Australia.”

Bit sad to prioritise upping the pay of office workers on a non-performance non-merit based system over looking at this issue.

wendy
Guest
wendy

is there any information on female/male ceo salary gaps?

Linda Norman
Guest
Linda Norman

Good article. It is not easy asking money from a Board to address a moral issue rather than one designed to increase sales! Well done!

More on HRM