A strategic approach to reducing the gender pay gap

Last month’s release of the Workplace Gender Equality Agency's (WGEA) gender pay gap reporting data represents a significant leap forward in workplace gender equity transparency in Australia.   

This data highlights persistent disparities in Australian workplaces and serves as a crucial reminder for organisations to reflect on their progress in closing their gender pay gap.

The headline figure WGEA reports for organisations, the median gender pay gap, which represents the difference in median remuneration between men and women, is merely a starting point. 

Reducing the gender pay gap takes time and consistent, coordinated effort across an organisation. We know this from the UK, who have seen a 1.6% reduction in the mean pay gap since public gender pay gap reporting began in 2017. 

To genuinely advance gender equity in the workplace, organisations need a strategic approach that examines the underlying factors influencing these figures. Rather than focusing on temporary solutions to reduce the pay gap, organisations should integrate their initiatives with broader business strategies that promote gender equity while driving financial success.

To achieve this, organisations must navigate what might initially appear as competing forces.   

Strategic workforce decisions, such as insourcing and outsourcing, or the design of incentive programs, can significantly impact the gender pay gap. Sometimes, these decisions might cause a short-term widening of the pay gap. Organisations should consider how they can leverage these choices to generate long-term impact that benefit both business performance and gender equity—a decision which results in short-term widening can yield long-term gains where a strategic lens is applied.

For instance, insourcing customer services—a low-paying gender-segregated occupation—could widen the pay gap. By providing upskilling opportunities for low paid staff, organisations can not only address pressing business needs by closing critical skills shortages but also contribute to sustainable gender equity as employees transition into higher-paid roles over time. 

In a globalised business environment, the differences between regional workforces (i.e. what gets done where) can significantly affect localised pay structures. Analysing where and why gender pay gaps arise in this context, instead of making reactive changes, can enable organisations to foster an equitable work environment that not only addresses local disparities but also enhances their global business operations.  

For instance, organisations might consider cross-regional career development opportunities. Such initiatives can develop diverse future leadership pipelines and enrich the organisation's overall talent pool through global knowledge sharing. By strategically investing in such initiatives, companies can drive both equity and operational excellence on a global scale.

Whilst short term fixes may seem attractive, they are often unsustainable, resource-intensive, and lack alignment with business objectives (e.g. investing in targeted external senior talent acquisition whilst overlooking the internal pipeline; developing lengthy development programmes which don’t address underlying barriers). Instead, organisations should consider long term impact while addressing broader business requirements—even if that means your gender pay gap takes longer to close. 

For instance, investing in engaging early careers programs will increase pay gap figures where they result in a higher proportion of women in lower paid roles. However, when designed effectively such programs may lower attrition rates, reduce recruitment and attraction costs, and develop a pipeline of engaged future leaders, ultimately lowering the pay gap in the long term.

There are a number of steps organisations can take to develop a strategic approach to gender pay equity: 

While the WGEA’s gender pay gap data offers a valuable snapshot, organisations must look beyond the numbers to achieve meaningful change. By embedding gender equity into core business strategies, organisations can address the pay gap while enhancing their overall performance. This strategic integration paves the way for a more equitable and prosperous future for all employees, aligning business success with the advancement of gender equity.