Is pay transparency the answer to the gender gap?
Asking candidates what they’re currently paid could be banned if a campaign to eradicate pay inequality gets its way
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 Yet companies still rely on an outdated legacy metric to determine salaries.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.