While there may be more female graduates than male in New Zealand, they still tend to earn less. What does this mean for business?
The Ministry of Education recently released a graduate earnings report, Moving on up, what young people earn after their tertiary education, to inform students of potential earnings in various professions. However, the report does not reflect the fact that female graduates continue to earn less than their male counterparts - as revealed by the ministry’s 2011 study.
Dr Katherine Ravenswood, of Auckland University of Technology’s Gender & Diversity Group, cited many factors that lead to this discrepancy in New Zealand. These included the fact that women’s traditional occupations tend to be less highly valued, that women are less likely to hold governance and senior management roles, the impact of having a family, and the weakness of pay equity legislation.
Bev Cassidy-Mackenzie, CEO – Equal Employment Opportunities Trust (EEO Trust) added to this list the fact that twice the number of women compared with men are in part-time roles.
Nevertheless, the disparity is not only a problem for young women, but may also have a detrimental impact on the workplace. “Undoubtedly, when people compare their work/effort with others who earn more for the same kind of work it can lead to lower employee engagement,” Ravenswood said. In turn, this is known to result in lower productivity and higher turnover.
In the long-term, she warned that reducing an individual’s expectations of their ability to develop and progress in their profession could have a wider impact. “This could result in reduced opportunities for skill development among individuals, which could impact on both the organisation and our economy (through lower overall skills/competencies in the labour market),” she explained.
Cassidy-Mackenzie agreed that the pay gap could lead to low morale among female employees and lower productivity and motivation, coupled with higher turnover, as a result. She also said that it was bad business. “Businesses that don’t reward or promote women are under-utilising half of the population, which is not good business sense,” she said.
So what can the HR department do? “HR managers can start the change in their organisations and through professional networks,” Ravenswood said. To begin with, HR managers can review promotion and job evaluation policies to ensure that these are clear and transparent, and that employees are aware of what particular jobs require and how they are remunerated.
“However, in doing this HR managers should really question how they are valuing particular types of skills and work,” she added. As an example of this, she observed that organisations often overlook the work that women do in teams and fostering inter-departmental co-operation.
Another suggestion Ravenswood made was to refuse to consider parental leave as a sign of lack of commitment or loyalty to an organisation or profession, as well as scrutinising which jobs could be made more flexible for women returning from parental leave.
Cassidy-Mackenzie noted that HR managers could work closely with the senior executive team to ensure that there is pay equity within organisations, for example by conducting a pay equity audit. “I am pleased to see that businesses are starting to do this and applaud them for it,” she said.
In addition, HR managers could arrange to have an independent, objective person to sit in on remuneration discussions and pay reviews to reduce the potential for unconscious bias.
Part of the problem, according to Ravenswood, was the persistence of “old boys’ networks”. “[However], there are increasing numbers of women’s professional networks, HR managers could speak to those and indeed join them to get the word out to more women about what they are worth and how to get it,” she said.
Key HR Takeaways:
- Review promotion and job evaluation policies to ensure that these are clear and transparent.
- Question traditional ways of valuing particular types of skills and work.
- Don’t treat parental leave as a lack of commitment to an organisation or profession.
- Scrutinise which jobs might be made more flexible for women returning from parental leave.
- Consider conducting a pay equity review.
- Consider including an independent, objective person on remuneration discussions and pay reviews.
- Exploit women’s professional networks.
