Tech Sector: Improving the Gender Pay Gap and Other Equity Challenges

Overview

Due to new legislation, there will be increasing transparency into gender pay gaps. This change is likely to encourage more employers to pay attention to these disparities and start addressing gender inequity issues.

The Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 made amendments to the Workplace Gender Equality Act 2012 (WGE Act), and applies to private sector employers and, from 2023, Commonwealth public sector organisations with 100 or more employees. From 2024, employer gender pay gaps will be published by mean, median and employer remuneration quartile based on remuneration for CEOs, heads of business and casual managers. For organisations with more than 500 employees, pay gap reporting is just one of six indicators of gender equality that will require a policy or strategy.

As outlined in our whitepaper, Preparing for Pay Transparency: Three key steps, employers need to prepare for increased scrutiny into gender pay equity, and diversity, equity and inclusion (DE&I) more broadly, not just from regulators but also from shareholders, current and potential employees and customers. Organisations that don’t have relevant strategies in place could risk their reputation and may fall short of workplace health and safety (WHS) and compliance standards.

By taking a data-led approach to exploring the complex factors at play in gender representation and remuneration, employers in the technology industry can course correct to manage these risks and tap into a larger segment of the workforce.

While new legislation has brought this issue into recent focus for many Australian companies, others have already created policies and strategies to help address gender biases.

According to the Australian Government’s Workplace Gender Equality Agency (WGEA), pay gaps in the tech sector (20.6%) are lower than the national gender pay gap (22.8%). As a result, the industry is looking to improve its gender balance through fairer approaches to talent attraction and promotion. To compete for in-demand skills in today’s competitive market, many are introducing inclusive practices to increase the pool of candidates and employees from which to draw when it comes to hiring and rewarding high performers.

Scorecard on career mobility and advancement

At the outset, things look good for a graduate; our Radford Global Compensation Database (RGCD) shows technology organisations are effectively hiring men and women in equal numbers. However, from middle management through to executive level, the workforce composition is skewed. Female representation declines across higher levels of the organisation, suggesting their careers are more likely to stall compared with male peers.

Source: Aon’s Radford Global Compensation Database

In particular, the RGCD shows that the hardware sector appears to offer relatively limited advancement opportunities for women compared with men. For example, it reveals that 50% of female employees in hardware firms are at the support level, compared to 30% of males.

Half of these female employees are at entry level support roles compared with males who are evenly spread across entry to mid-level support roles, suggesting males have more opportunities to progress their career.

Looking further into the RGCD, higher up the ladder we see another gap in rates of promotion for women, with only 20% of females advancing to executive compared to 34% of males¹. And at the top, across both software and hardware companies overall, the female headcount at executive and management level is significantly lower than male headcount¹.

Figure 1: Data from Aon’s Radford Global Compensation Database¹

Potential barriers to progress

This is just some of the data highlighting that women are taking a narrower career path in technology compared with men and may have fewer opportunities for advancement^1,2.

Potential barriers could include:

• Training pathways

Training is usually designed as a regular and continuous pathway. However, this can get sidetracked when women take time away from their work, for example to care for family. Education opportunities can become limited, causing a lack of training and qualifications to become a barrier to advancing from support roles into engineering and technical roles, as shown in Figure 1.

• Leadership development

A broken career pattern and ongoing carer responsibilities can also limit women from participating in traditional leadership pathways, which often involve multi-day offsite programs and other activities and responsibilities that demand extended working hours. Women’s lower representation in management and executive roles is reflected in Figure 1.

• Flexible working

After three years of allowing remote working, some organisations mandating a return to office are facing resistance, especially from women and others who benefit from being able to design their working hours and location around family responsibilities³. Our research^1,4 shows that offering flexible working patterns and health and wellbeing support can help to improve employee wellbeing. Flexible working patterns are also critical for achieving diversity, equity and inclusion (DE&I) goals, yet only 58% of Asia Pacific companies integrate their wellbeing strategy with DE&I compared to 85% globally⁵. Having a model that supports flexible and remote work can be promoted as a key point of difference and can become a source of competitive advantage for technology companies looking to hire and retain talent, especially if employees’ needs are met at various life and employment stages.

Building an inclusive structure and culture

Barriers can be addressed by reviewing and overhauling recruitment and career advancement frameworks and processes in the following areas:

• Pay gap analysis

Accurate data is vital for effective action on hiring and performance management processes. Organisational data on pay gap, performance management and career advancement can help to define gender equality goals and inform strategies. It can also provide essential context to pay gap reporting and messaging to inform stakeholders and manage any brand and reputation impacts.

• Job architecture

Data from our Radford Global Compensation Database shows that within tech organisations, males tend to move up the ranks faster and are more highly rewarded for loyalty than females. Designing a formal job architecture with DE&I in mind can help to combat this, providing the framework for equitable talent and reward programs, as outlined in this article.

Job architecture is made up of the many elements that align jobs and compensation. This includes job leveling, titling, grades and career progression and provides the foundation for salary structures and other equitable compensation programs based on job value. When communicated correctly, a well-designed job architecture can provide employees and candidates with a clear career path they can understand how to navigate while giving organisations a way to monitor, understand and remediate pay gaps.

• Performance management

A properly implemented performance management system has been shown to significantly improve the employee experience for females. Therefore, HR leaders need to examine performance management data to identify inconsistencies and use insights to develop a more consistent process for driving equal advancement opportunities.

• Scientific skills assessment

Unconscious bias can pose a barrier to inclusive recruitment and career advancement decisions. However, assessments can be used to help mitigate this risk.

According to a meta-analysis published in the Journal of Research in Personality⁶, there is a significant correlation between personality traits and job performance across various occupations and industries. So, by combining insight into skills and personality to predict a person’s potential for success in a role and identifying specific training needs, a thorough assessment process can account for gender differences.

Organisations often think of pre-employment assessments as being primarily about candidate selection, but they can also play a vital role in internal talent mobility strategies. The results of tests carried out during recruitment can be used to create career development plans and assess an employee’s best options for future assignments, training opportunities and professional development. Organisations can regularly assess employees to identify those with the potential to take on leadership roles or reskill into emerging functions.

By taking a proactive approach to gender equality and communicating effectively on actions and outcomes, companies can help employees and candidates understand how they can compete on an equal footing for rewards and career opportunities, as well as support brand and organisational values.

Providing clear career paths within the company and demonstrating respect for different life stages and career choices are key components of offering a sustainable working life. While not everyone aspires to management roles, employees still want to be valued for their contribution and offered opportunities to grow.

Aon’s Talent Advisory team offer specialised guidance on a wide range of people risk issues, including gender pay equity and transparency, among other DE&I matters. For more information or to talk to a consultant about the needs of your workforce, please contact us.

References

1. Radford Global Compensation Database | Aon
2. Australian Government, Workplace Gender Equality Agency, Pay Gap Data
3. Big Test for Return to The Office Starts Now, Australian Financial Review, July 2023
4. Rising, Resilient, a Report by Aon, 2021
5. Aon’s 2022-2023 Global Wellbeing Survey
6. Five-factor personality domains and job performance: A second order meta-analysis by Yimin He,M., Brent Donnellan, Anjelica M. Mendoza, cited in Journal of Research in Personality, Vol. 82, October 2019