Why legislation alone will not fix pay equity

It’s important to understand the practices applying to gender and pay in your organisation to minimise the likelihood of engagement in a formal pay equity settlement process, says Catherine Fitzsimons.


Pay equity is a significant focus for many organisations around New Zealand. There has been extensive coverage in the media, recent government settlements and there are legislative changes on the horizon. Like many challenging problems, pay equity has complex origins and resolving them will require change at a Government, society, organisation and individual level. 

While some organisations have made great progress, the issue is not simple and will require a long-term multifaceted approach. 

Expecting legislation alone to solve the problem is not realistic. However, it will provide a mechanism to address some of the more intractable issues particularly involving historical inequity on the basis of occupation.

But much more needs to be done and HR has a critical role in this from the design and wording of advertisements, to the processes and culture of the organisation. 

It is prudent to understand the practices applying to gender and pay in your organisation to minimise the likelihood of engagement in a formal pay equity settlement process. 

We acknowledge that most organisations strive to be compliant with legislation and seek to have good governance and sound policies and practices.

Yet we still observe ‘traditional’ pay, people management and performance systems lingering in organisations which leave them open to bias and potential for gender inequity. Unfortunately, there are many ways inequity can be present, much of it reflecting the outcome of process design, custom and practice
or individual bias. 

While it is pleasing to observe that there is likely to be little gap between genders at the graduate level on appointment, the gender pay gap can develop and widen through the employee lifecycle if preventative action is not taken. Regular review of your remuneration policies is important. 

• Are the goals which were set for it still optimal for your organisation? 

• Does the policy achieve those goals? 

• Do you use job evaluation or job matching? 

• How is your remuneration framework structured? 

For example, if your organisation rewards on the basis of tenure in a ‘step framework’ does this create bias by gender? 

Generally speaking men tend to have longer tenure in organisations than women and thus a tenure based system will reward time instead of, or as well as, the employees’ performance, skills or value to the organisation.

Is your performance management system vulnerable to implicit bias? Is there a correlation between performance and reward? There are many questions to ask but most importantly don’t make assumptions, collect and analyse data and establish the impact of your policies and practices before taking action. 

The best way to tackle the issue is by addressing two key focus areas:

1. Audit your current remuneration practices, resolve any inequity and continue to monitor. 

2. Eliminate inequity and bias from your organisations values, policies and procedures.

Analysing your data can be overwhelming, where do you start? What metric do you refer to? What is significant? Central to understanding if you have a gender pay issue is being able to compare apples with apples within your organisation. 

Having a common basis to quantify the size of a position is essential. This is where job evaluation is invaluable. 

Last, but definitely not least, to support long-term equity in gender pay, it is essential to review your organisation’s policies and procedures to eliminate the opportunity for bias. 

Our very ‘human’ nature, made up of individual experiences and preferences, means we are all vulnerable to bias. While bias awareness training is enlightening and a useful tool, it will not eliminate bias. 

Review and re-engineer all policies and systems which are linked to remuneration and reward including recruitment, performance management, promotion systems, benefits and incentive schemes, to eliminate the opportunity for bias. 

An essential part of this process will be having a compelling ‘why’ partnered with an effective and enduring communication process to achieve buy in and cultural change. 


Catherine Fitzsimons is a consultant at Strategic Pay.

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