Addressing the risks of a gender pay gap
Having a gender pay gap is not fair to employees, and it’s bad for an organisation’s reputation. There are historic reasons why the situation may have arisen: acting to stay informed about the status in your company and addressing any issues proactively is key.
The gender pay gap can have a significant impact on your business, affecting employee morale, retention, recruitment, brand reputation and legal risk. Dissatisfied employees don’t work productively and a poor reputation as an employer will deter talent from joining you. The issue affects roles with base and variable pay, such as sales compensation plans, just as much as traditional salaried roles.
Gender pay gap reporting can impact the bottom line
Mandatory reporting regulations have rightly put the gender pay gap in the spotlight in recent years. The rules vary from country to country (and state to state in the USA). In Canada, even small organisations (over 10 employees) must report and can be fined for non-compliance. In the EU, there are pay transparency rules and fines for employers that shirk their obligations.
In the UK, larger organisations (250+ employees) have to share their data. There are no specific penalties, but making the information available is designed to highlight poor practice. Unsurprisingly, employees are taking action where they discover inequalities.
Companies with persistent gender pay gaps may face legal challenges. Employees can use gender pay gap data as evidence in pay discrimination cases, especially when the data suggests systemic disparities in compensation practices.
In the USA, Google has faced a gender pay discrimination lawsuit, with employees citing pay discrepancies in various job categories. Google eventually settled $118 million in 2022, affecting thousands of female employees.
Tech companies like Oracle have faced claims from female employees, using aggregated pay gap data to show that pay practices are unfair. Settlements and policy changes have happened as a result.
Tesco and Asda are currently battling claims underpinned by gender pay gap data: the organisations could have to pay out billions in back pay if they are successful.
What your organisation can do to ensure fair pay in sales
Gender pay gap data is prompting companies to reassess pay structures, create transparency around compensation, and implement systematic changes to ensure pay equity. It’s easy to see why companies that proactively address these gaps will likely benefits from better employee satisfaction, reduced legal exposure, and a stronger market reputation.
Sales Performance Management (SPM) systems can play a role in helping companies manage their gender pay gap. They provide data transparency, help organisations structure compensation more equitably, and support performance-driven pay practices.
In the sales function, while commission-based pay structures are theoretically meritocratic, gender pay gaps still exist. They are typically caused by account allocation, promotion practices, cultural biases and inequitable base pay structures. Addressing these issues with transparent policies and equitable pay practices can help mitigate gender disparities in sales commission roles.
How SPM can help monitor pay status and support fair practices
A well-designed ICM solution can help your organisation uncover any gender pay disparities in your sales function and ensure that they are kept out of future compensation arrangements:
- Compensation insights: SPM systems can aggregate and analyse pay data across gender, position and tenure
- Pay benchmarking: with real-time data on compensation, bonuses and incentives, organisations can benchmark pay more effectively against industry standards, so pay structures align with equitable compensation practices
- Performance metrics and gender analytics: SPM system analytics can segment performance and compensation data to assess if high performers receive consistent compensation, incentives and promotion opportunities
- Automated incentives: Automated systems for incentive calculation help ensure bonuses and commissions are aligned with quantifiable performance measures, reducing the risk of gender-based pay discrepancies.
- Automated reporting capabilities: SPM systems can generate automated reports on pay, performance, and promotion rates, segmented by gender. These reports support compliance with gender pay gap reporting laws
- Audit trail: SPM systems allow companies to trace how compensation and incentives were calculated. It’s useful if your organisation needs to demonstrate equitable pay practices to regulators or in response to an employee claim
You need data insights, a positive culture and the will to act
SPM systems provide valuable data to help you understand your gender pay gap position. Their systematised approach and process automation help to embed consistent policies and practices. Transparency, reporting and compliance will help you implement and maintain equitable practices.
Of course, to tackle the cultural issue of gender pay gaps, your organisation must also embed equity-focused policies and actively monitor trends within the context of broader HR and organisational strategies.
Sales compensation data from SPM might catalyse wider actions. For example, you might need a full review of initial salary offers, promotion rates, and policies on pay negotiations. The overall organisational culture must support gender equity and give HR a mandate to enforce it, so that the insights generated from SPM lead to actionable and fair pay practices.
If you’re concerned about the gender pay gap in your organisation and would like to use SPM to help monitor and mitigate issues in sales team compensation, get in touch. You can discuss your challenges in confidence with our compensation solution experts to understand how to make best use of your current or future SPM solution.