Hiring more women could boost the UK economy by £8.5 trillion – but we need more than pay reviews to hit that high
Earlier this year, EasyJet’s chief executive Johan Lundgren announced he cut his pay to match his predecessor Carolyn McCall. It’s a commendable move, and one that went some way to setting an example that other companies can follow. But while this should be celebrate, actions like this alone will not be enough to close the gender pay gap.
For that, we need to look at the root cause: the lack of women in senior positions.
In tech roles there simply aren’t as many women as there are men – a quick scan through the diversity breakdown of top tech firms will show you that. Yet even the women who do take up these roles tend to get the short straw when it comes to chances for career advancement. In fact, the Women, Work and the State of Wage Inequality report, launched in April last year, highlighted that 53% of the time, companies only interview male candidates for a given role.
It’s not just a lack of opportunities once they’re employed, either. A US survey called Elephant in the Valley found 75% of women have been asked about family life, marital status or children in an interview, highlighting further bias in the interview process simply because some women want to start a family. And those returning from maternity leave can expect to be financially worse off, too, earning a third less than men, according to an IFS report.
Until we solve these issues, the gender pay gap won’t be going anywhere.
Unconscious bias is one of the underlying reasons for this imbalance in hiring and compensation. Try as we might, prejudice will work its way into our minds and influence our choices; as humans we can’t help it.
In business this affects the hiring process, in particular at the interview stage, which can work against us when trying to create a balanced workforce with equal pay; research has found that unconscious bias can profoundly influence recruitment and selection decisions. As part of a recent experiment, researchers asked people to rate two identical CVs, one with a male and one with a female name. The participants, made up of an equal amount of males and females, both rated the male candidate as significantly more competent than the identical female one, and they also suggested a higher salary for the male applicant.
One way around unconscious bias is to hire new employees and set their pay based on data rather than human judgement. This means every decision on pay is made using data. Data doesn’t lie, and it can’t be biased. It doesn’t take into account the fact the employee might be female – it simply looks at their skills and experience. The benefits of doing this are huge, not only for the individual employees but businesses and the wider economy.
According to research by McKinsey, companies with more gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. They also rank higher on indicators of organisational cooperation and health, and report higher profitability and returns on equity.
More than that, $12 trillion could be added to global GDP by 2025 “if every country matched the progress towards gender parity of its fastest-improving neighbour,” according to another McKinsey study. These claims were further bolstered by a London Stock Exchange report that revealed 1,279 women-led companies have contributed a total of £25.9 billion in revenue to the UK economy.
I’m hopeful we’ll close the gender pay gap eventually, but it won’t happen overnight and will require collective industry action for parity to be achieved. At Hired, we ensure we not only champion this level of transparency in hiring and pay, but that we too publically share our wage and diversity figures.
It’s important that we all work together to close the pay gap. For now, making these small but significant changes will help us move towards that ultimate goal.
Gordon Smith is head of UK at Hired