In support of International Women’s Day 2021

Why organisations should mind the pay gap

Change starts with transparency

In the past decade, we’ve seen a shift in the way businesses approach gender inequality.

Gender pay gap data exposes the factors that lead to women earning less than men, which spans all markets and all industries. Closing the gap will take time, and progress will not be linear.

Acknowledging the data and reviewing diversity initiatives are the first steps. But what comes next? It's about building a strong foundation by ensuring that employees feel a sense of belonging and feel confident their leaders value a diverse perspective. This task requires a concerted effort at every part of corporate development.

By joining the conversation on the current state of inequality, we hope to inspire other organisations to do the same. Let's consider the global data carefully and ask ourselves what we are doing to address gender bias, and how this plays into the broader diversity and inclusion narrative.

What is the gender pay gap?

Before we dig deep into the findings, let’s start by looking at exactly what the gender pay gap is. There’s a stark difference between the “pay gap” and “equal pay”. The pay gap is the percentage difference between average hourly earnings for men and women.

Equal pay is a legal requirement that men and women should be paid the same for the same position. This means that a company might have a gender pay gap if a majority of men are in top jobs, despite paying male and female employees the same amount for similar roles.

Why does it exist?

Many factors come into play here. Women tend to take on caring responsibilities for young children or elderly relatives more often than men. This means women are more likely to work in part-time roles, which are often lower-paid or give fewer opportunities for progression.

KPMG finds that 15% of male workers in the UK are paid less than the real living wage compared to 24% of female workers.

Discrimination also contributes to the gender pay gap. The Equality and Human Rights Commission (ECHR) found that one in nine new mothers were either dismissed, made redundant or treated so poorly they felt they had to leave their job. This can create a gap in experience, leading to lower wages when women return to work.

15% Male Workers

24% Female Workers

Key findings

Women are paid less and it hits harder in an economic crisis

Enterprises with gender diverse leadership perform better

Embracing flexi-work improves your diversity practice

Global, Not Local

It's a global problem

Around the world, women earn on average 23% less than men. If things remain as they are, it will take 257 years to close this economic gap. On average, women in the UK make 15.5% less than men. Women have been graduating from university at higher rates than men for decades. But degrees don’t translate to pounds: The pay gap increases for women at higher education levels.

United States

Mexico

Brazil

Chile

United Kingdom

Poland

Israel

Botswana

Malawi

Pakistan

Russia

Republic of Korea

Japan

Australia

Source of World Infographic

Closing the gap benefits everyone

If women were paid fairly, we could cut the poverty rate in half globally. On a local level, the economic benefit to the UK by improving gender equality in the workplace could amount to £189 billion.

The corporate pipeline

Progress has been marginal since 2015

Since 2015, we've seen only modest signs of progress in the representation of women in the corporate pipeline.

For the sixth year in a row, women continued to lose ground at the first step up to manager. As a result, women remained significantly outnumbered in entry-level management (38% women to 62% men, improving only 1% in 5 years).

Representation of women by level, % of employees

A = Entry Level B = Manager C = Senior Manager/Director D = Vice President E = Senior Vice President F = C-Suite

2015

2016

2017

2018

2019

2020

Graph Source

2020 data shows that UK women on average received 15.5% less money than men.

Gender pay gap

UK Deep Dive

The UK’s progressive policies

In the UK, public, private and voluntary sector organisations with 250 or more employees have to report on their gender pay gaps annually. If an organisation reports a gender pay gap, it does not mean women are paid less than men for doing the same job, but it does show that, on average, men occupy higher-paying roles than women. See the full breakdown here.

Impact of COVID-19

COVID-19 turned back the clock

The coronavirus pandemic could wipe out 25 years of progress, UN Women suggests. Even before the pandemic, women were doing about three quarters of the 16 billion hours of unpaid work. For every one hour of unpaid work done by men, three hours was done by women. Now that figure is higher.

WOMEN DISPROPORTIONALITY IMPACTED

The UCL Institute of Education (IOE) found that mothers are looking after children during an average of 10.3 hours of the day (2.3 hours more than fathers), and are doing housework during 1.7 more hours than fathers.

On top of this, the Trades Union Congress revealed that just under half of women in the UK are concerned that childcare will cause negative treatment at work.

Diversifying the seats at the table

Watch our real talk interview with Emily Chang

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WHY DIVERSITY MATTERS

The business value of gender diversity

Mckinsey research from May 2020 finds that enterprises in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than enterprises in the fourth quartile.

The greater the representation of females in all seniority levels, the higher the likelihood of outperformance. Enterprises with more than 30% women executives were more likely to outperform those with between 10% and 30%.

Therefore, promoting women into leadership roles has a significant impact on the bottom line and shareholder sentiment.

Likelihood of most diverse enterprises (per leadership) having above-average profitability compared to the least diverse enterprises (bottom quartile)

+15%

+21%

+25%

Mapping companies on their performance in gender diversity

Vlad Shumis awarded best CEO for women and diversity

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Cultural Impacts

Flexible working helps close the gap

We know the female talent pipeline starts to shrink at the first step into management. Women who return from “a career break” earn around a third less than male counterparts – a substantial pay cut. As salaries rise the presence of women falls.

Well-designed flexible working empowers women to continue to participate in the boardroom. It is crucial to normalise flexible working by boosting its use across all levels of seniority. This will help challenge women's stereotype as carers and enable more men to work flexibly and share caring responsibilities more equally with their partners.

The CMI and the UK Government Equalities Office have created guidance on how to make flexible working work and reduce the gender pay gap.

GUNJAN AGGARWAL

A message from our Chief People Officer

As we reflect on the true purpose of International Women’s Day in 2021, I believe it is also crucial to look back and recognise that the conversation around gender diversity has progressed throughout the years.

When I started my career there were fewer women in STEM and certainly fewer women in Silicon Valley. The language of productivity – the structures of productivity – were industrial and male-dominated. The pay gap wasn’t just prevalent in salaries, but also in equities, which can be life-changing in such a crucible.

Even though the gender pay gap has narrowed over time, the findings tell us that more needs to be done on a global level. As recently as 2018, we heard how only 9% of founder and employee startup equity is owned by women.

On top of this, research highlights one of the biggest concerns for businesses right now is the long-term effect the pandemic could have on women in the workforce.

I have always been focused on fostering strong cultures that are diverse and inclusive, and I’ll never stop doing this. Since I joined RingCentral, I’ve witnessed how the company strives to build a diverse employee base and how much support this garners throughout the organisation.

We’re continuing to develop RingCentral as a destination for diverse talent. Some of the initiatives supporting this are our women’s education group, our RingCentral Women in Leadership focus group, and our Women & Allies Leadership Coalition.

Our CEO being named as one of the best for women is a reassuring milestone, but we don’t intend to rest on our laurels. There’s much more to be done in our sector and in our world, and I encourage everybody to join the conversation.

Learn about working at RingCentral

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Act now on your diversity plans

Based on the insights from Mckinsey, LeanIn.org and UK government data, here's how enterprises can rethink their inclusion strategies to specifically challenge the gender pay gap:

1. Challenge the likeability penalty

The Heidi-Howard Study tells us that when a man is successful, his peers often like him more; when a woman is successful, both men and women often like her less. This trade-off between success and likeability creates a double-bind for women. If a woman is competent she does not seem nice enough, but if a woman seems really nice, she is considered less competent. Listen for the language of the likeability penalty, particularly when making hiring decisions and evaluating performance.

2. Run inclusive meetings

At school, girls get less airtime and are interrupted more than boys, and this behaviour often moves with us from the classroom to the boardroom. If you watch men and women at the same level in a business, you’ll notice that more of the men sit in the front seats, while women gravitate toward the end of the table and edge of the room. Without full participation in meetings, you cannot tap everyone’s skills and expertise. If a female colleague is interrupted, interject and say you’d like to hear her finish. Be aware of “stolen ideas” and look for opportunities to acknowledge the women who first proposed them.

3. Share the office “housework”

Women tend to take on more tasks such as writing notes, organising events and training new hires. As a result, they become distracted from core responsibilities and often get pulled away from participating. The person taking diligent notes in a meeting almost never makes the killer point. In keeping with deeply held gender stereotypes, people expect help from women but not from men. When women do favors at work, they earn no points for doing so—but when they say no, they are penalised. For men it’s the opposite. Audit who’s doing service work and make sure it’s distributed evenly between women and men.

4. Measure inclusion at every level

Measurement drives accountability; accountability drives behaviour change. We recommend you measure female representation at all levels of your organisation, not just when hiring. You can also track the percentage of females being promoted annually compared to males. Finally, create programmes that enable more females to be considered for the first step up to management to combat data that suggests you don’t give equal opportunity here.

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Sources