IMHO: Mind the gap

There is no doubt that the requirements of governance have changed over the years.  Boards are now looking at issues like transparency, communication and accountability and determining how they are demonstrating these principles to their shareholders and stakeholders. 

One principle is that all staff should be paid fairly. No board member will disagree. Yet our gender pay gap in New Zealand has not moved in years and most of that pay gap is now not based on the individual characteristics of employees (such as their level of education), but on the behaviour of employers (hiring, promotion and pay practices).  

We are also learning more about the wide pay gaps based on ethnicity and disability. 

In New Zealand the national pay gap is 9.1% but Strategic Pay says that gap is likely to be as much as 18 percent in corporates. To break that down, for every dollar a Pakeha man earns, a Pakeha woman earns $0.89 and a Māori man earns $0.86, and a Māori woman earns $0.81.

You may have seen in March, we launched a Public Pay Gap Registry showing 47 of our large employers are reporting their gender pay gaps. Seven of those are also reporting their Māori pay gap, and seven are reporting their Pasifika pay gap. 

Some suggest that transparency on big issues like pay equity is brave, but really it is just good, modern governance.

Why? There are many reasons. 

Fronting up and demonstrating leadership to your organisation will show your employees that they are all valued equally.

And there is a growing expectation from employees for fairness and transparency. They want to know an organisation is committed to fixing what’s not fair. 

While there is no overnight answer to moving the dial on pay gaps evidence from overseas shows that even publicly announcing a focus on this issue has helped start to close the gap.

Organisations addressing their own gap is one of the most important things to move the dial - so it is in your hands, as directors, more than ever.

This is already common practice in the public sector and it works.  Once pay gap reporting became a requirement for public service departments, gender pay gaps decreased from 12.2 per cent to 8.6 per cent.

But it also makes very good business sense.

Firstly, it is a chance for your management to take a fresh look at the demographics of staff and understand how they can better utilise the talent you have.  

Secondly, staff who have been assured that they are all valued equally will undoubtedly find the organisation more attractive and therefore retention is likely to improve. Research shows this is especially important for Gen Z employees. 

Thirdly, from both an internal and external perspective, showing you are intent on closing the gap is also a way to make a real difference and demonstrate corporate social responsibility. 

Both investors and consumers look for transparency and fairness when making their decisions.  So, it is in the interest of any organisation wanting to attract and retain staff, grow markets, and find capital to be transparent, publish their pay gaps and work on fixing them.

The good thing about this registry is that it is easy.  The 50 employers who have taken one of the first steps towards addressing their pay gap issues and signed up to it have agreed that not only does it make good business sense, but it is also simple: as easy as adding one number – your aggregate pay gap - to your website or Annual Report. 

Many of the employers we have worked with didn’t believe they had an issue and have been shocked that their pay gaps were much higher than expected.

The employers we’ve worked with have also found that the reasons for the gap are usually much larger than they originally anticipated, but don’t let that deter you.  

This is a big job, committing to transparency is the first step, and is a major mark of trust with all your stakeholders: internal and external.

There are two other parts to our campaign, last year we launched #Just Ask to encourage employees to ask their managers and boards about their pay gap.   And we have been calling the Government to work with business to create standardised measurement and coverage of all employers, like so many other modern economies.

This October we’ll see the 50th anniversary of the Equal Pay Act, a perfect time for the Government to stay true to its promise to address pay gaps.

Which means now is a perfect time for your organisation to get ahead of the curb.

It is definitely time to mind the gap New Zealand. 

About MindTheGap

MindTheGap is an alliance campaign backed by the Clare Foundation. The MindTheGap group believes that pay gaps for Māori, for Pacific peoples, for gender, disability communities and other ethnicities shouldn’t exist in Aotearoa NZ. And its registry aims to normalise pay gap reporting so that everyone is paid fairly for their work.