Ivey Publishing

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Why Companies’ Attempts to Close the Gender Pay Gap Often Fail
Anderson, D.;Bjarnadóttir M. V.;Dezso, C.;Ross, D. G.
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6 pages
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Harvard Business Review
Gender pay equity has become a big point of contention at many companies. But the most common approaches for identifying a pay gap and resolving it are full of pitfalls for the unwary. That’s because it’s a tall order: you have to calculate the gap the right way and figure out how to fix it without ballooning your wage bill, all while truly helping underpaid women, maintaining your incentive structure, and avoiding the creation of new legal liabilities. The authors have extensively researched the most common ways companies try to fix a pay gap – and how these fail or cause other problems. They’ve found that closing a gender gap without regard to cost effectiveness can be prohibitively expensive; however, only focusing on cost (as many managers do) creates more problems than it solves. They suggest first identifying which employees are contributing the most to the gender pay gap at your firm, and then allocating raises as efficiently as possible to close the gap — while working within the framework of your HR strategy and norms of fairness.
Human Resource Management
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