Is pay transparency the answer to the gender gap?

Open Bion­ics, a Bris­tol-based start­up mak­ing 3D-print­ed bion­ic hands, is clear about avoid­ing a gen­der pay gap across its team by putting salary brack­ets on its job adver­tise­ments, which it has done since 2019.

“We have a pol­i­cy of zero nego­ti­a­tion on job offers. We will make an offer that is fair and aligned to every­one else on our team, in line with our poli­cies around salary selec­tion,” says the company’s co-founder and chief oper­at­ing offi­cer, Saman­tha Payne,

“It’s impor­tant that every­one is paid accord­ing to their lev­el of expe­ri­ence and skill, with­out bias. We’ve also begun work­ing towards greater salary trans­paren­cy inter­nal­ly and so far it has been well received.” 

Open Bion­ics is one of a num­ber of UK com­pa­nies that has com­mit­ted to ban salary his­to­ry ques­tions from its hir­ing process, as part of a cam­paign launched in March by the East Lon­don Faw­cett Soci­ety (ELFS) to help erad­i­cate the gen­der pay gap. 

It believes ban­ning salary his­to­ry ques­tions, and estab­lish­ing and shar­ing a set salary range for a par­tic­u­lar role, is a cru­cial step towards break­ing a per­pet­u­al cycle where someone’s salary can nev­er progress beyond a cer­tain ceil­ing.

How salary histories are linked to gender and racial pay gaps

In the UK, the pay gap between women and men cur­rent­ly stands at 15.5%, while that between white British peo­ple and those from minor­i­ty eth­nic com­mu­ni­ties is cur­rent­ly around 20%. Yet half of employ­ers still ask can­di­dates for their cur­rent salary, accord­ing to the ELFS, as there is no leg­is­la­tion requir­ing oth­er­wise, despite 19 states in Amer­i­ca already hav­ing a ver­sion of the salary his­to­ry ban in place. 

“Salary his­to­ry assumes a lin­ear pro­gres­sion, but peo­ple switch between full time and part time, coun­tries and also between start­up and blue-chip organ­i­sa­tions fre­quent­ly. Yet com­pa­nies still rely on an out­dat­ed lega­cy met­ric to deter­mine salaries. In our salary his­to­ry sur­vey, almost 90% of respon­dents felt past salary was an unfair way to deter­mine salary,” says ELFS cam­paign­er Shobaa Hari­das, who is also head of oper­a­tions for ASG Blockchain. 

“Being asked for your salary his­to­ry allows his­tor­i­cal pay inequal­i­ty to sim­ply con­tin­ue. Ask­ing for salary his­to­ry dur­ing can­di­date inter­views turns salary nego­ti­a­tions into a zero-sum game. All the pow­er and lever­age resides with the com­pa­ny who can get away with mak­ing the low­est pos­si­ble offer as opposed to a fair and equi­table one.” 

Pub­lish­ing salary brack­ets on adver­tise­ments is already com­mon­place in the pub­lic sec­tor and World Bank data shows the glob­al gen­der pay gap is 10 per­cent­age points low­er among pub­lic organ­i­sa­tions than in the pri­vate sec­tor. 

Despite this link, it will take a com­bi­na­tion of mount­ing pres­sure from the pub­lic and for­mal leg­is­la­tion for the pri­vate sec­tor to achieve pay fair­ness and trans­paren­cy, accord­ing to Ruth Thomas, for­mer human resources leader at PwC, Lloyds and Cred­it Suisse. She’s now the co-founder of pay equi­ty soft­ware plat­form Curo Com­pen­sa­tion, which is work­ing with com­pa­nies includ­ing EY, AXA Group and Sony Music on clar­i­fy­ing their com­pen­sa­tion method­olo­gies.

“There’s a whole body of research that shows women and minor­i­ty groups will under­val­ue them­selves in salary nego­ti­a­tions. But just because your pay has his­tor­i­cal­ly been low­er due to the jobs you’ve tak­en, how you have been paid pre­vi­ous­ly should­n’t impact your val­ue for a role. If you can see what the pay range is for a job, then that’s the range you should go into,” says Thomas.

What is holding corporates back?

In the tech sphere, com­pa­nies such as Git­Lab, Where­by and Tan­dem have set a prece­dent by mak­ing their pay­ment method­olo­gies and bands avail­able online. Thomas agrees this sec­tor and star­tups in gen­er­al are more ahead of the curve than cor­po­rates. Big com­pa­nies can be ham­strung by com­plex lega­cy sys­tems and a fear that salary brack­et dis­clo­sure could pave the way for legal ram­i­fi­ca­tions from employ­ees ques­tion­ing remu­ner­a­tion, she says.

There is also a per­cep­tion that pub­lish­ing salary brack­ets could put off some can­di­dates, who the com­pa­ny would oth­er­wise have had a chance to nego­ti­ate with.

That’s why for Lucy Smith, founder and chief exec­u­tive of grad­u­ates jobs web­site Dig­i­tal­Grads, which has also signed the ELFS cam­paign, employ­er edu­ca­tion is key.

“It’s easy to not under­stand that old-fash­ioned prac­tices like ask­ing about salary his­to­ry and not adver­tis­ing a salary band are dam­ag­ing to work­place equal­i­ty,” she says. “We hope to get to the point where adver­tis­ing roles with salary bands, and not ask­ing about a candidate’s cur­rent salary, is nor­mal.” 

Move­ment in that direc­tion is hap­pen­ing. Analy­sis by jobs web­site DirectlyAp­ply con­clud­ed around 30% of online job adver­tise­ments spec­i­fy the salary on offer. This is increas­ing at a rate of 6%, fuelled in part by the online democ­ra­ti­sa­tion of salary data which is forc­ing employ­ers to be more trans­par­ent, accord­ing to DirectlyAp­ply co-founder Will Cap­per.

Eliz­a­beth Wil­letts, founder of flex­i­ble work­ing web­site Invest­ing in Women, believes not only will this spur a vir­tu­ous cir­cle of com­pa­nies not want­i­ng to be seen as less pro­gres­sive than their rivals, but it will extend to greater trans­paren­cy around oth­er ben­e­fits, such as mater­ni­ty and shared parental leave, which can­di­dates often don’t want to ask about.

“Employ­ers will dis­close things like gym mem­ber­ships, but not the impor­tant stuff, such as mater­ni­ty ben­e­fits and how long some­body has to be employed there to be eli­gi­ble for those schemes, which is a huge bar­ri­er for women because they often don’t like apply­ing for jobs if they think they may miss out on mater­ni­ty ben­e­fits,” says Wil­letts.

Yet get­ting gov­ern­ment back­ing to prompt wide­spread change is a “com­plex, pro­tract­ed process”, says ELFS cam­paign­er Hari­das, who argues com­pa­nies that tru­ly believe in diver­si­ty and inclu­sion shouldn’t be wait­ing for leg­is­la­tion to move for­ward with salary trans­paren­cy. “Com­pa­nies spend bil­lions on diver­si­ty train­ing yet con­tin­ue with a prac­tice that active­ly pro­motes struc­tur­al bias,” she con­cludes.