As regulations on pay transparency tighten and employee expectations rise, organizations that embrace pay equity and transparency will thrive. With more than one-fourth of the US labour force already covered by salary transparency legislation, and recent strengthened requirements in the EU, the need for action is clear.
Our guide, “A 5-step Guide to Closing the Gender Pay Gap,” is your roadmap to drive real change. Backed by reliable sources and packed with insights and actionable steps, this guide empowers organizations to implement impactful actions that eliminate pay disparities and earn recognition from stakeholders wherever they are in DE&I journey.
In this guide, you will discover a roadmap to close the workplace pay gap in your organization and its milestones:
Establish an authentic policy on equal pay
Measure and address the unexplained gender pay gap
Embrace an intersectional approach to understand how various criteria intersect in pay discrepancies
Develop a clear remediation strategy to build a gender-balanced talent pipeline
Maintain transparent communication to foster conversations around pay equity
Empower line managers to facilitate constructive discussions on pay equity.
The time for change is now!
Click ‘Full guide’ to download your copy of our guide to close the gap
The EDGE and EDGEplus Standards optimize CSRD compliance in DE&I topics and fast-track effective, consistent reporting across regulatory frameworks, using data sourced from HR and DE&I professionals. Whether reporting locally or globally, these standards serve as a robust, unified data source.
Using EDGE and EDGEplus Standards can boost CSRD compliance in DE&I, while offering a single, reliable data source for consistent reporting.
Overview
The EU Corporate Sustainability Reporting Directive (CSRD) has been approved and will require all EU companies to disclose data on the risks, opportunities, and impacts of their activities on people and the environment. This new directive will help ensure that EU companies and subsidiaries of global non-EU firms are transparent and accountable when it comes to their environmental and social impact. The purpose of the CSRD is to strengthen the existing requirements of the Non-Financial Reporting Directive (NFRD), and to ensure that companies report more detailed and reliable information on all relevant environmental, social and governance elements based on clearly delineated reporting standards.
Who is Impacted?
Listed companies
All large companies – companies with more than 250 employees and more than €40M turnover and/or more than €20M in total assets
Non-EU companies with EU-based subsidiaries, or with securities on EU-regulated markets, which have a net turnover of over €150M within the EU
Listed small and medium enterprises (SMEs) (SMEs have the option to opt out of the directive during a transitional period until 2028)
The Required Timeline
The sustainability reporting rules will start applying between 2024 and 2028.
From 1 January 2024 for large public-interest companies with over 500 employees already subject to the NFRD (with reports due in 2025 based on 2024 fiscal year data)
From 1 January 2025 for large companies that are not presently subject to the NFRD (with reports due in 2026 based on 2025 fiscal year data)
From 1 January 2026 for listed SMEs (with reports due in 2027 based on 2026 fiscal year data). SMEs can opt out until 2028.
In this article, discover how organizations can combat sexual harassment and foster safer, more inclusive work environments by taking on impunity, banning silencing agreements, and championing gender diversity.
In September 2023, a research paper published in the British Journal of Surgery regarding female NHS surgeons revealed:
29.9% had been sexually assaulted
63.3% had been sexually harassed
89.5% had witnessed other staff being sexually harassed.
The reaction to these statistics was widespread shock and incomprehension. But should it be so surprising?
If workplaces are not effectively creating a culture of equality, transparency and accountability, and if they are not putting in place robust anti-harassment policies, then these are the consequences. We can’t simply hope that things change. Hope is not a strategy. We must actively drive change. We must be disruptive.
Clearly, there is work to be done regarding sexual harassment in the workplace. And we need commitment from organizations to analyse and address these challenges with rigour and discipline. To drive sustainable gender equality, reduce harassment and discrimination and ensure fair treatment for victims of harassment and assault, organizations should focus on three key areas:
1. The culture of impunity
A friend recently told me about someone he knows whose CEO was fired for sexual harassment. Everyone knew he had a reputation for “wandering hands”. He even had a nickname that reflected his reputation. And yet everyone within that organization felt that anything they said or did would be pointless; that he would get away with everything.
That is a culture of impunity. And it is sadly all too common.
Sexual harassment cases are very private. And this makes it difficult for organizations to analyse and correct the actions they took. When an employee violates an organization’s code of conduct and is fired, everybody knows why that person was fired (for example for fraud, violent conduct, etc.)
However, when somebody is fired for concerns related to sexual harassment, nobody knows about it unless they are a very public figure – that person simply disappears from one moment to another.
Overcoming this culture of impunity requires organizations to take a strong stance against harassment:
To ensure that appropriate actions are taken regardless of the perpetrator’s status or achievements within the workplace
To create a culture where victims are empowered to speak up without the fear of negative consequences or – as is often the case – complacency.
2. Silencing agreements and private arbitration
In the US, Congress passed a law in late 2022 to ban non-disclosure and non-disparagement agreements in cases of sexual harassment. Known as the Speak Out Act, the legislation is part of the government’s reaction to the MeToo movement, and it formally recognizes that silencing agreements feed into the culture of impunity.
However, many organizations assume that silencing agreements are illegal across the UK and Europe when they are not.
On 5 September 2023, the use of non-disclosure agreements in the workplace was debated in UK parliament. During the discussion, MP Peter Grant stated: “I do not think that I have ever seen agreement among so many speakers in a debate.
“[…] there was a time when NDAs were routinely abused between powerful men to cover up each other’s crimes and frauds. Most NDAs now are being used by powerful men to silence and victimize vulnerable women, and that is the abuse of the system that must be dealt with most urgently.”
While it is promising that governments are taking steps to improve the situation, organizations shouldn’t be waiting for silencing agreements to be illegal before restricting their use. Policies must move with the times and organizations must face the consequences if they don’t.
Zelda Perkins, former assistant to disgraced Hollywood producer Harvey Weinstein, summed this up neatly in her June 2023 Financial Times article: “[…] the wall of silence created by NDAs is beginning to crumble. People are speaking to the press out of desperation as businesses fail to deal with the problems. NDAs are now as likely to signpost issues as they are to protect reputations.”
And so, organizational policies must restrict the use of silencing agreements, except when requested by the victim, to ensure accountability and transparency in sexual harassment cases.
There is a similar issue around private arbitration.
Many employees are scared to publicly lose their claim – something many of them assume will happen due to the financial imbalance between them and the corporate defence. As a result, we have seen this emerging tendency of taking employment issues into the private sphere where accountability and transparency are constricted.
Silencing agreements and private arbitration can prevent victims from seeking justice and can contribute to a culture of secrecy around harassment cases. By proactively banning these, organizations can protect the rights of victims and promote a more open discussion of harassment issues.
3. Lack of equal representation and inclusive culture
Having equal representation and an inclusive culture is one of the most fundamental ways to uproot harassment and discrimination.
Not only can diverse boards consider a broader range of viewpoints when decision-making, but women in senior positions can also help ensure that perpetrators of sexual harassment in the workplace are not tolerated. A study from 2021 found that increasing the number of female directors by just a single individual can be directly linked to a 20% decrease (approx.) in sexual harassment.
Representation and inclusiveness of culture are two pillars of the EDGE Global Standards – the world’s leading global standards for Diversity, Equity and Inclusion (DE&I) that underpin EDGE Certification.
However, the focus on representation must not be at board level only. Gender diversity should be at all levels, throughout the talent pipeline. This is how power becomes effectively redistributed and can make a meaningful impact on workplace culture and reduce sexual harassment.
Drive meaningful change in your organization with EDGE Empower
DGE Empower is the leading software for workplace DE&I and the way to become eligible for EDGE Certification.
Tackle issues like sexual harassment and gender inequity with precision
Track and measure your journey towards a fairer workplace
Build a robust DE&I and ESG reporting framework
Gain credibility by demonstrating your commitment and progress through independent third-party certification.
Wherever you are on your DE&I journey, discover how EDGE Empower can help you apply the same rigour and discipline as you would to any other business-critical mission.
Book a demo
Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
In a world where progress can quickly be reversed, we must remember that the fight against sexual harassment in the workplace is perpetual. It is time for organizations to take proactive measures, strengthen their anti-harassment policies, and create a culture that values equality, dignity, and respect.
2023 marks 50 years since Billie Jean King, EDGE Certification ambassador, successfully fought for equal prize money for men and women at the US Open. But when speaking at the anniversary event in August, King highlighted that working towards gender equality hasn’t stopped:
“While we celebrate today, our work is far from done. Struggle is a never-ending process. Freedom is never really won. You earn it and you win it in every generation.”
The younger generation may not know about King’s battle for gender equality in tennis and beyond. And in some ways, it doesn’t matter; there are always new battles to fight.
The work is never done.
Michelle Obama, also speaking at the anniversary event, echoed this: “This is about how women are seen and valued in this world. We have seen how quickly progress like this can be taken away if we are not mindful and vigilant, if we do not keep remembering and advocating and organizing and speaking out and, yes, voting.”
It is, in some ways, frustrating that the fight is never over, but we must not be discouraged. Times change. Societal expectations change. And every generation has the duty to rethink what gender equality is in the context of their own experience and continue advancing toward it.
Every generation has the duty to rethink what equality is and continue advancing toward it.
“I’m still trying to learn more and more all the time,” Billie Jean King said to PBS in a discussion about equal pay. “I’m not that emphatic. I’m trying to figure it out.”
The ongoing battle against sexual harassment
On 20 August 2023, Luis Rubiales, then boss of Spain’s football federation (RFEF), kissed player Jenni Hermoso while celebrating the nation’s success at the Women’s World Cup final. The backlash was swift and fierce. Hermoso stated to the media that she did not consent to the kiss and Rubiales – despite his protestations that he had done nothing wrong – eventually resigned from his position and was handed a restraining order by the Spanish courts.
This is a very public example of sexual harassment in the workplace. And it perfectly demonstrates why we must never stop progressing, never stop moving and adapting. The progress made through the popularisation of women’s football was undone with a stark reminder that gender equity is a perpetual challenge.
Billie Jean King is right: time moves on, and you must move with it.
This is the very real reason why organizations must strengthen their anti-sexual harassment policies. If it isn’t robust enough to prevent sexual harassment, business leaders can’t be surprised by the consequences of their inaction. Only disruption can bring change.
Take the first step
Organizations must actively develop a culture in which harassment is known to be unacceptable and in which victims can raise concerns with the full confidence that they will be taken seriously and dealt with promptly and discreetly.
Organizations must actively develop a culture in which harassment is known to be unacceptable.
The first step to achieving this is to put in place a robust policy to prohibit and prevent sexual harassment that demonstrates the organizations values around equality, dignity and respect at work.
What is included in an anti-harassment policy?
A clear purpose: a commitment to providing a harassment-free workplace for all employees
Legislation with which the organization must comply and legal definitions of key terms
Objectives and actions, such as providing resources and introducing mandatory training
How complaints can be raised, informally and formally, and how they will be investigated
Who is responsible for policy implementation and who is ultimately accountable for its success
How the policy’s effectiveness will be measured and when the policy will be reviewed
How the progress against actions will be communicated.
Now is the time to act. Choose EDGE Empower, today
The work around Diversity, Equity and Inclusion (DE&I) may be ongoing, but with EDGE Empower, you can apply the same rigour and discipline as you would to any other business-critical mission. Stay up to date with the latest DE&I practices and thinking, measure progress against your DE&I goals and credibly demonstrate your commitment to change by becoming EDGE Certified.
Make your organization a place where people want to work, where clients buy, and where investors invest.
Book a demo
Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
We come from different parts of the world and have taken different career paths, one of us starting as a professional tennis player and the other as an economist. But like many people, we have experienced inequality through fewer opportunities, less pay, and the discounting of our expertise. Driven by the desire to have our ideas, capabilities, and actions acknowledged and appreciated and to advocate for fairness and equity, we fought to open doors and minds. Along our respective journeys, we’ve identified two principal factors preventing progress on diversity, equity, and inclusion (DEI)–an unproductive amount of risk aversion and resistance to change.
The U.S. Supreme Court’s decision on affirmative action, which prohibits race-conscious college admissions, signals new challenges to DEI initiatives may be on the horizon. Even before the court’s ruling, we saw signs of backsliding on DEI, reinforcing our resolve to continue fighting to dismantle systemic barriers and create inclusive workplaces where everyone can thrive.
Risk aversion can hinder growth and prevent individuals or organizations from seizing valuable opportunities. We understand that some executives may feel intimidated, leading to decision paralysis. However, we encourage you to shift your mindset and embrace a different perspective. Indeed, being overly risk-averse can cause you to miss opportunities that could have yielded substantial results.
We are no strangers to risk ourselves, having had to navigate the identification, assessment, and mitigation of threats or uncertainties that could have impacted our careers. Our experiences have shown us that adopting a positive outlook and robust approach can yield remarkable results.
I am Billie Jean King. Let me take you back 50 years, when 60 women gathered in London to discuss the creation of the Women’s Tennis Association (WTA).
In a sport primarily rooted in individual competition, the new entity would unify the members’ voices and serve as the forum for collaborating on common goals and advocating for their interests and concerns. Every woman in the room evaluated the risk of the opportunity, and they voted to form the WTA. That momentous outcome enormously impacted women’s professional tennis, which has grown to more than 70 tournaments and more than $180 million in prize money. The impact spread far beyond tennis, creating the foundation for the women’s sports industry that is in place today.
Progress, including in the area of DEI, also demands disruptive change. Executives may accept this idea in theory, as they express excitement and enthusiasm when discussing disruption and change, since these concepts are commonly associated with innovation, growth, and staying ahead of the competition. However, despite the professed commitment to change, many workplaces are stuck in time, perpetuating outdated practices and failing to embrace DEI’s potential. By doing this, they are missing opportunities to embrace a change that can produce transformative outcomes and unlock new possibilities for individuals and organizations.
I am Aniela Unguresan. In 2013, a novel idea began to take shape in my mind: How could the rigor and discipline of data collection, analysis, and objective measurement be brought to the DEI space? The thought presented a series of intriguing choices.
The crucial element was finding ways to integrate DEI into the heart of the value creation process within organizations rather than approaching it as a superficial add-on. Realizing this goal meant we could harness the power of technology to implement objective measurement standards and secure independent verification to make change happen fast, in a scalable way, and at the global level.
It was vitally important to cultivate a different mindset among HR and DEI professionals so they would be receptive to embracing a new approach and technology and embed a systematic and structured approach into an area that was considered highly subjective and, therefore, difficult to measure. Lastly, it was necessary to focus on a very specific set of indicators of current status and progress over time that would serve as the foundation for creating DEI strategies as part of and aligned with the overall business.
The concept worked. Today, hundreds of EDGE-certificated organizations across 57 countries and 27 industries base their DEI strategies, priorities, and roadmaps on robust indicators, performance standards, and independent third-party verification. The early adopters now see DEI as a driver of value creation that makes their organizations more sustainable, agile, and resilient.
In our respective journeys, we have advocated for fairness and worked to dismantle systematic disadvantages because we believe everyone deserves a seat at the table, a voice in the conversation, and a vote in their future.
The evidence demonstrating the positive impact of DEI–where everyone feels valued, respected, and empowered–on innovation, culture, and growth is overwhelming. Overall, the change that comes from DEI is necessary and beneficial. Let’s seize this moment by coming together to accelerate progress and create a legacy for future generations. We’re keeping our commitments to DEI, taking bold actions, and making a positive impact–and we’re encouraging you to join us.
*Links not in original publication.
Keep reading
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Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
Aniela Unguresan, Founder, EDGE Certified Foundation, participated on a panel titled How to Tackle The Gender Pay Gap at the Financial Times’ Women in Business Summit Europe in London on Tuesday 13 June. Joining her in discussing this pressing challenge were Baroness Helena Morrissey DBE, Alesha De-Freitas and Dr Katharine D’Amico. Daniel Thomas, Global Media Editor of the Financial Times, moderated the panel.
The discussion was wide-ranging, covering issues including the difficulties women face in negotiating for better pay, the neuroscientific roots of bias and the role of compulsory reporting in laying the groundwork for change. Rather than treating the gender pay gap as an unexplainable phenomenon, they traced it back to neuroscience, linguistic styles, inherent biases present at all stages of decision making, a system that penalises motherhood but rewards fatherhood, one where women start on lower salaries and progress slower than their male colleagues, and the human condition that makes us reluctant to change. But change is possible, and it is imperative. It requires conscious effort – and it requires commitment from business leaders.
“We expect change to be incremental,” Aniela Unguresan explained. “We hope that by talking about it, making commitments to it, reporting on it, year after year things will get better naturally. Well, change is actually disruptive. And we hate disruption as human beings.”
Yet is also important to acknowledge the heartfelt, emotional nature of pay equity as a topic: “It’s probably one of the most emotional topics that I have witnessed in the corporate world. Pay is the absolute outcome indicator. It’s the absolute measurable indicator of what is going on.”
Despite this, Aniela also stressed the importance of a careful, deliberate methodology. “While it’s an emotional topic, we need to bring rigour and discipline to the conversation.” It’s about finding a balance between the emotion inherent to questions of social justice and rigorous, data-backed analysis: “Once we have the lay of land, bring the emotions in.”
Speaking on the recent EU pay transparency directive, the founder of EDGE Certified Foundation explained the role compulsory gender pay gap reporting plays in fostering transparency – pay transparency is a powerful public policy instrument. The benefits of pay transparency extend beyond judgements made by regulators, board members and shareholders, but also encompass everyday interactions at every level within the organization. “Compulsory reporting creates transparency. Without that transparency, those conversations [about pay] cannot happen very often. Especially for women, and for people who don’t have the same networks inside the organization to get this information in an informal way.”
However, pay transparency should not be seen as a cure-all solution: “Transparency makes the problem visible. But it doesn’t solve the problem,” Aniela said. “The fact that an organization is transparent internally and externally will not close the gap in and of itself.”
There needs to be a plan, with clear remediation for different issues, and a remediation budget set aside to close the gap. But first you need to understand the situation within your own organization.
The EDGE Empower software solution grants organizations the ability to analyse their unexplained gender pay gaps. Remember: unexplained does not mean unexplainable. Through sophisticated tools – including EDGE’s Pay Tool, which delivers authoritative gender pay gap analysis – leaders can uncover hidden biases and discrimination that may be at play. And through EDGE Certification, they can visibly and credibly demonstrate their commitment to DE&I.
As organizations resolve pay inequities, they will create a more sustainable business, one where the benefits of equity make a tangible difference to the balance sheet.
Learn more about our complete and integrated software-based DE&I solution by booking a demo.
Book a demo
Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
Reputation is defined as the opinion that people in general have about someone or something, or how much respect or admiration someone or something receives, based on past behaviour or character. On that very point, Socrates claimed: “Regard your good name as the richest jewel you can possibility be possessed of.”
His words still ring true today, for the importance of reputation in business has never been more critical, especially when it comes to a company’s ‘good’ or ‘bad’ track record in Diversity, Equity and Inclusion (DE&I). Depending on how an organization’s DE&I progress is measured, monitored, and communicated can have a direct impact on how an organization is perceived, and how it performs.
When I joined IKEA in Switzerland, while the business was considered a market leader, its brand perception was challenged. Of the three critical measures – quality, low price, and sustainability – we only rated highly on low price, and that was a risk for our brand positioning. Whereas there was an advantage in being considered affordable, it was to our detriment to be poorly thought of in terms of the quality of our product, and our commitment to sustainability and social good. So, we changed things around.
Staff engagement
The key was in engaging our staff from the beginning. We actively sought individuals and teams that better mirrored our diverse customer base. We engaged designers with broader national and cultural understanding. We conducted various initiatives that connected our brand to society at large, including providing temporary employment to refugees, many of whom were later engaged on a permanent basis, and put particular emphasis on training for both Swiss and non-Swiss employees on how to work alongside different cultures.
As part of a much wider plan, we also became EDGE Certified at Move level in 2013 and within two years had reached the Lead level – tangible proof of the steps we had taken and the progress we had made on our journey towards a better, more diverse organization. Building on the insights we gained from going through the certification process and implementing the suggested actions, we managed to increase both internal and external awareness.
Of particular importance was communicating our progress to all our stakeholders and the media, recognizing the positive impact this would have on our co-workers, the company and the business.
The perception of the business changed remarkably in the eyes of its publics and placed us in the top three organizations within the IKEA group in the scoring of the quality, low price and sustainability Index by which we were measured.
What we witnessed, and what other businesses will similarly experience if focused on the right things, is that reputation not only has a direct impact on attracting the right talent, but it also makes you a more desirable organization for people to want to work with and buy from. And this has a direct correlation with improving market share.
Proactive and consistent
Being proactive and consistent in your DE&I strategy ultimately creates a fairer organization in which people are proud to be associated and belong. It encourages other stakeholders to get closer to your brand. Having the right policies also brings about its own rewards: a 50:50 shortlist for any new hires or promotions, for example, will ultimately lead to a 50:50 pipeline of talent!
The media in Switzerland, as I am sure they are in other parts of the world, are very thorough. They do not want to get caught out or look foolish for reporting on an organization’s DE&I performance without checking the real story behind the statements. In our case, they contacted our employees, to see whether what we said in public, was consistent with how we performed in private. It’s certainly a lesson from which many others could learn, and organizations should never be blindsided by their own PR. As Professor Robert Eccles, founding chairman of the Sustainability Accounting Standards Board wrote in the Harvard Business Review some years ago: “Looking at the world and one’s organization through rose-tinted spectacles is an abdication of responsibility.”
The strength of a brand can be measured in terms of how many times its customers are prepared to forgive it, should something go wrong. Recognizing that reputational risk is a category of risk, in its own right, is therefore essential. An individual or an organization with a strong reputation and proven track record may be given a second chance if accused of some misdemeanor about which they had no prior knowledge; an organization or individual with a poor reputation may find themselves hung out to dry.
Caring about your reputation is important, and so too is evidencing and communicating your actions. Over-claim, and you will surely be exposed, as recent stories of greenwashing and pinkwashing have shown. Ensuring your DE&I policies are consistent and fair, however, will reap significant rewards, financial and social.
Book a demo
Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
At the end of April, the Council of the EU adopted a new pay transparency directive, with clear rules on pay gap reporting and remediation that talk about unexplained gender pay gap and intersectionality – elements already central to the EDGE Certification methodology and standards. This is how the era of ‘brutal transparency’ around pay equity begins.
While equal pay for equal work or work of equal value is nothing new in the EU, the implementation and enforcement of this principle has been an ongoing battle due to a lack of transparency. This directive addresses these challenges by talking about the need to be transparent in reporting and the determination to take clear remedial actions if the unexplained gender pay gap exceeds plus or minus 5%.
The EU directive also talks about fines for employers that don’t follow the rules. This is not something to be taken lightly considering that GDPR, a directive with similar penalties for non-compliance, just fined Meta €1.2b for breaching its rules.
Crucially, the new directive talks about intersectionality, the combination of multiple aspects of diversity, which has been included in the regulation for the first time, and it has a particular emphasis on gender and working with a disability status.
What does the new EU directive say?
Organizations with more than 250 employees must report their gender pay gap annually.
Organizations with more than 150 employees must report every three years (this will eventually be extended to companies with more than 100 workers).
Organizations with a pay gap of more than 5% must conduct a joint pay assessment with workers’ representatives.
Workers who have suffered gender pay discrimination can receive compensation, including full recovery of back pay and related bonuses or payments in kind.
In addition, the burden of proof in pay discrimination cases will now fall on the employer. The organization must prove that they have not violated EU rules on pay transparency – or face “proportionate and dissuasive” penalties.
EU countries have up to three years to adapt their national legislation in response to the rules.
The way in which EU regulations are rolled out by member countries is often misunderstood, so it is important to point out that EU member states cannot change the directive or refuse to follow it. A directive, by definition, is mandatory. They can change the modalities of application only (for example the level of fines or the institution that an organization must report to).
What they can’t change is the requirement to report, to analyse intersectionality or to take action if the unexplained gender pay gap is plus or minus 5%. Change is here.
The need for independent verification is coming
Third-party verification has never been more important – and the EDGE Certification methodology and standards are already completely aligned to the EU regulations.
While this is an EU directive, it will raise the expectations of workers at global organizations. If an enterprise company is taking very clear actions to remediate pay inequities in its European offices, then the talent working in Hong Kong or Brazil, for example, will demand the same treatment, the same level of transparency and the same remedial action.
This directive therefore marks the beginning of a new era for DE&I. People across the world will start talking about the impact of this regulation. And organizations that prioritise universal transparency on pay equity across their company will be at the forefront of this welcome shift.
EDGE Certification
EDGE Certification is an independent third-party verification that gives organizations a universally recognized symbol of their commitment to DE&I.
There are three levels of EDGE Certification to recognise the organization’s DE&I maturity and their commitment, progress and success. EDGEplus Certification can be added at any level to show the organizations pledge to tackle intersectional equity as well as gender equality.
Organizations preparing to become EDGE Certified will undertake a regression analysis of salary and pay to assess unexplained gender pay gaps. This is conducted using standard variables with the option of adding variables specific to the organization.
This methodology already aligns with the EU’s pay transparency directive.
Working towards pay transparency
In past years, the biggest hurdle to pay equity was agreeing on a methodology. In the application of these new EU regulations, however, the methodology becomes clear. The most difficult part is now bridging the gap between total opacity and total transparency when it comes to pay and its various components.
Pay equity analyses are usually conducted behind closed doors, under deep layers of privilege, especially in the United States, but also in some parts in Europe. So, how do we move from here to something that is communicated transparently? How do you equip managers to understand pay equity and what the company is doing towards achieving it? And for employees, how do you equip them with a way to ask for a pay equity review in the same way in which they might ask for their annual leave to be approved?
The answer is clear DE&I goals and constructive, constant communication. Having these conversations internally means employees don’t have to go to the media or a judge to express their dissatisfaction or achieve what’s rightfully theirs – it becomes a normal part of working life.
It is therefore essential to ensure that your employees are aware of your Equal Pay Policy and understand your actions and commitments in this area.
Managing pay transparency
Transparency is a requisite for employees to judge whether they are being treated fairly. This means that being proactive is essential.
To communicate in a meaningful and credible way about your proactive management of pay equity it is essential to gather objective evidence on where you currently stand by conducting a pay equity analysis which can include gender but also other aspects of diversity for which statistical data is available such as ethnic background and origin, sexual orientation, working with a disability, and nationality.
Once you understand your current status, you can create a pay equity narrative, which can be regularly shared with employees. These communications can explain how the organization is proactive in measuring, analyzing and reporting on equal pay data, and how detected cases of any unexplained pay gaps are being systematically remediated.
The EDGE Certification process brings credibility to this communication through the independent verification of the organization’s pay equity analysis.
Ensure that senior leaders communicate internally and externally on a regular basis about the organization’s commitment to pay equity and how this relates to the overall equality journey.
Provide training to line managers to help them to make the right pay and/or bonus decisions and enable them to talk confidently to their teams about the rationale and fairness of pay processes and outcomes.
Provide different opportunities for discussion on the topic so that employees can ask questions and understand the basic concepts and terminology around gender and intersectional pay equity.
Identify ways to ensure that the information you provide is accessible and easily understood – use plain language, infographics and videos and communication across as many channels as possible.
Share pay information that is not confidential or related to individuals, such as pay spines and salary bands, with your employees.
Publish data, externally and internally, on your identified pay gaps and set out your action plan to address these, for example in your Annual Report.
Achieve transparency on pay equity with EDGE Empower
The management of pay equity must be an ongoing business objective, integrated within your organization’s policies, processes and practices and kept under systematic, constant review. Engrained in the EDGE Certification methodology and standards, EDGE Empower helps organizations to achieve this.
It is the complete DE&I software-based solution that enables organizations to bring the same discipline and rigour to DE&I as they would to other business-critical missions and to become eligible for EDGE Certification.
Wherever you are in your DE&I journey, discover how EDGE Empower can help you achieve your DE&I goals. Book a demo, today.
Book a demo
Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress with insightful DE&I assessments and data, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
There’s a truth that needs to be shared: you can’t have pay equity without balanced representation. It’s a simple fact that many organizations seem to overlook. As a consequence, leaders will conduct a pay equity audit, declaring it as the first stepping-stone in their Diversity, Equity and Inclusion (DE&I) journey, with broader aspects of DE&I to be addressed at a later date.
By focusing on the portion of the pay gap that is adjusted for objective factors – such as tenure, performance, level of education, complexity of the job and type of job etc – they will meet their compliance-related goal. But by demoting the issue of representation to a later stage in their journey, organizations will inevitably see inequities return.
In this article, we explore some of the reasons why pay equity is not enough to deliver long-term, sustainable DE&I progress and what organizations should do to make a true commitment to change.
What is pay equity?
Pay equity refers to the principle of providing equal compensation for employees who have similar job functions. Put simply, it means equal pay for equivalent work – no matter what the employee’s gender, age or ethnicity.
The term pay equity is most used in relation to the gender pay gap. There are laws in many countries that require businesses to report publicly on their pay gap, which is one of the reasons that leaders often address pay gaps before other aspects of DE&I.
Sadly, often this is where their DE&I journey starts and stops. Why? Because the focus is on legal compliance and not on commitment to diverse, equitable and inclusive workplaces for all.
Choose commitment over compliance
When organizations start with a pay gap before looking at broader issues, what they often mean is that they will be looking at the pay gap adjusted for objective factors, such as:
Tenure
Performance
Level of education
Complexity of the role
Type of job.
In other words, organizations will be looking at the portion of the overall pay gap that can be explained by career and role-related characteristics. They will then calculate the portion of the overall pay gap that cannot be explained by any individual personal characteristic that is not strictly related to the job, such as gender, race and ethnicity or nationality. They will then address those pay disparities.
This approach is taken because equal pay for equivalent work regulations mainly refer to this portion of the pay gap that cannot be explained by career and role-related characteristics.
The downside of this approach is that, after adjustments, an organization where all top managers are white men – with women and diverse talent in lower levels of responsibility and support functions – will still be recognized as providing equal pay for equivalent work. Sadly, many organizations see this as ‘job done’.
In truth, though, pay equity is a necessary stepping-stone for compliance but is never the place to go for proactive management of DE&I in the organization. It is not enough for commitment, for positive impact – that’s because there is no such thing as closing the pay gap without closing the gap in representation.
There is no such thing as closing the pay gap without closing the gap in representation.
Communicate your intentions
If your organization’s ambitions are to do only what is required for you to continue to legally operate as a business, then be honest and transparent about this. But if you want to claim more than compliance – to claim commitment – there is no such thing as baby steps.
Organizations must ask themselves what their intentions are: are we running pay equity analysis to manage our risk? Or are we committed to investing energy and resources into creating a more diverse, equitable and inclusive workplace? These are two fundamentally different directions:
Pay equity is about managing risk for the company and staying on the right side of the law
An effective DE&I strategy is about creating a workplace where people thrive, with DE&I as a source of creativity, innovation, resilience, and intelligence.
All organizations have their priorities. But if managing risk is yours, don’t claim proactive investment into DE&I.
Don’t dissociate diversity from equity
While some organizations will end their workplace equity journey at an adjusted pay gap, others remain dedicated to a longer journey. These organizations may truly intend to tackle representation and other issues, but by pushing these challenges until after they work on unfair pay practices, they dissociate diversity from the issue of equity. And again, that can affect the long-term value of the organization’s DE&I strategy because these issues cannot be effectively tackled in silos.
So, does that mean organizations must address all DE&I issues at the same time?
Not necessarily. It is understandable that organizations will prioritize pay equity. It is the most visible part and a legal requirement – it gets reported, it is published in annual reports, investors are looking for it, employees and potential employees want to see it.
However, to address pay disparity at its root, these organizations must therefore set a timetable for their DE&I goals. Pay equity one year, diversity the next, for example. This is where an integrated software-based DE&I solution like EDGE Empower can help by offering such benefits as:
Trackable DE&I priorities and roadmap
A rigorous and proven data-led DE&I strategy
Dashboards that provide a consistent view across dimensions of diversity and different countries of operation
A framework for effective DE&I reporting.
In addition, through EDGE Certification, organizations can gain visibility and credibility through independent verification by third-party auditors.
A true commitment to DE&I means applying the same discipline and rigour that you would to other business-critical missions. And pay equity is never enough to proactively drive the DE&I agenda.
Pay equity is never enough to proactively drive the DE&I agenda.
Organizations that are not going beyond pay equity limit themselves greatly in the speed of change that they can see in their organization. They similarly limit themselves to how they can make their efforts be valued by their diverse stakeholders because they are putting effort into respecting the law, but nothing else.
Pay transparency is an instrument of public policy
There is often confusion between public policy instruments around pay equity, and instruments that companies must adopt to practically manage pay equity.
When the UK government said that organizations must publicly publish the medians between men and women, it was one of the smartest public policy instruments ever.
Indeed, the government can’t go into every business in the country to force equal pay for equivalent work. What they could do is name and shame, which was precisely the purpose of this pay equity public policy instrument: naming and shaming. Companies were saved from the embarrassment of being called out for doing something illegal, but the point was still made.
However, organizations must not base their own pay equity analysis and methodology on reporting requirements on median and average pay because they were never intended as an instrument to practically manage pay equity. The role of public pay equity policy is not to consult companies on how to manage their pay equity – their role is to see on which side of the fence you are as a business.
So, there must be a clear distinction between the compliance and name-and-shame instruments put in place by governments and the proactive management of DE&I.
Compliance is important, but only disruption can bring change. Requirements for public policy don’t go far enough to provide detailed insights into pay at your organization. That’s why EDGE uses a regression analysis to measure pay equity. Because it’s a detailed analysis for organizations to remediate and understand what actions they must take.
DE&I investment is cost-effective
We all live in a world of limited resources. Many organizations aren’t necessarily making a moral choice to only address pay equity with an adjusted pay gap and then stop. They are prioritizing what they must do by law because they need to spend their money carefully and wisely.
The issue with this is that this approach is an unwise utilization of resources – your attention may be focused for a period, but it becomes costly over time. Why? Because DE&I can’t be tackled in ‘remediation mode’.
Without resolving the systemic issues related to how you attract, develop, retain, and motivate a diverse pool of talent throughout your pipeline, you effectively give your organization all the chances of recreating and repeating the same problem the next time you hire.
By failing to get to the root causes of inequalities in the workplace, you will always be in this ‘remediation mode’, forever creating something that cannot be undone.
Put simply, if your organization keeps treating the symptoms, then those symptoms will appear again and again.
If you are interested in accelerating and visibly proving your DE&I progress, no matter where you are on your journey, EDGE Certification powered by EDGE Empower can help. Book a demo to discover how you can stop treating symptoms and instead find a cure for inequity in your organization.
Book a demo
Wherever you are in your DE&I journey, whether at the very beginning or further along, EDGE Empower helps accelerate your progress, and through EDGE Certification visibly prove it – applying the same discipline and rigour that you would to other business-critical missions. Learn more by booking a demo, today.
