'Make it your superpower. Find the power of pay transparency'
Minister for Women Nicola Grigg marked International Women's Month with a resounding call to workplaces to lower the gender pay gap in New Zealand.
The country's current pay gap sits at 8.2%, according to the Ministry for Women, with the gap even bigger for wāhine Māori, Pacific, ethnic, and disabled women.
"The gender pay gap isn't just a statistic – it reflects systemic barriers that hold women back. This year's International Women's Day theme is accelerating action and making real impact and progress," Grigg said last March 8.
Source: Ministry for Women
The International Labour Organisation noted in 2022 that pay transparency can help expose pay differences between men and women and identify underlying causes.
Implementing this initiative can help organisations understand the disparities that exist within their workforce and analyse why they're happening, according to Nancy Romanyshyn, Senior Director of Total Rewards Strategy and Solutions at Syndio.
"When you are transparent about how you're making decisions and the decisions that are being made and those outcomes, it's harder and harder to have disparities. You tend to have more consistency in what it is that you're doing because everybody is looking at it and sees it."
The senior director stressed that the gender pay gap is a complex issue that won't be easy to address.
"But certainly with transparency, when you're saying this is how we pay for the job, we pay according to these factors, these are the things; this is how we make the decision — it helps organisations make more consistent decisions, which is really what their intention has been all along," she said.
Pay transparency has long been a polarising issue across organisations, with its implementation fuelled by legislation across the world.
"One of the things that makes it so challenging is because sometimes when folks hear pay transparency, they're thinking immediately of legislation," Romanyshyn said. "They're thinking about: 'We have to post ranges for when we're advertising jobs.'"
But she considers pay transparency to be something much broader than that.
"I think it's just about being transparent about how we value work and the skills and effort that our employees bring to the work," she said. "When you start to think of it that way, then it means that you want to be transparent about why you pay, what you pay, how pay decisions are made, what is the context for them, because it's just really important."
The impact of transparency has varied - there have been findings noting that its introduction was beneficial for organisations, while there are others who claim it led to turnover.
But one benefit of implementing pay transparency is it demonstrates how thoughtful and important the pay is to companies and the work that goes in trying to get it right, according to Romanyshyn.
Another benefit of transparency is how it builds trust with employees.
"There's just been so much volatility right in the market with layoffs," Romanyshyn said. "Employees just appreciate that they can ask questions, that they can get this information about not only what their current pay is based on, but how they can earn more money."
It also allows employers to stop assumptions stemming from pay among colleagues, who could be looking at other job postings with pay ranges.
"Opening up that dialogue, it gives companies a chance to tell their own pay story before employees come in with their own assumptions," she said. "I think that's really important to explain to employees that: 'Yeah, I know what you're researching and what you're seeing in job postings for these other companies. Let's have a conversation about how we think about it and our relationship with you and how we really value you.'"
The challenge, however, with introducing pay transparency is the risk of introducing tensions at work due to disparities in pay among colleagues, which will require employers to check if the disparities are lawful and can be explained.
"First step is making sure that you have a plan for those corrections, and even if you're unable to make them all at once, having a plan for how you're going to incrementally close those gaps, I think is critical," Romanyshyn said.
However, there may also be a "very good reason" why there are differences in pay among employees. Some of the disparities among colleagues may stem from the company's compensation philosophy.
"You thought your jobs for the same — they're not. Or you thought your skill sets are the same — they're not," she said. "That's part of our compensation philosophy. We pay according to the job, we pay according to your skill set. Those are all things we take into consideration."
