Gender Pay Gap
What is Gender Pay Gap?
This metric calculates the mean figure (the difference between the average pay) of women and non-binary people’s pay against men’s pay in the same role or level.
How to calculate Gender Pay Gap?
To prepare, sort your salary data by job title and gender, then calculate the hourly rate for each.
Hourly rate is used so that there is no discrepancies between part-time and full-time staff, if all your staff work the exact same hours then you can use their annual salary instead of hourly rate.
Step one: For each gender in your company, calculate the sum total of their hourly rates.
hourly rate (1) + hourly rate (2) + hourly rate (3) + … = sum total of hourly rate
Step two: For each gender in your company, calculate the mean hourly rate.
sum total of hourly rate for one gender / total # of people of that gender = mean hourly rate
Step three: Calculate the pay difference for women in your company.
mean hourly rate for men - mean hourly rate for women = pay difference for women
Repeat this step, replacing women’s mean hourly rate with your non-binary people’s hourly rate to calculate the pay difference for non-binary people in your company.
Step four: Convert the pay difference to a percentage to establish the Gender Pay Gap.
pay difference for women / mean hourly rate for men * 100 = Gender Pay Gap %
Repeat this step, replacing women’s pay difference with your non-binary people’s pay difference to calculate the Gender Pay Gap for non-binary people in your company. You could also compare this to the mean hourly rate for women to determine if there is a Gender Pay Gap between non-binary people and women in your company.
Understanding your Gender Pay Gap will help you discover salary inconsistencies and potential indirectly discriminatory pay and remuneration strategies as your company grows.
Like using any average to understand a complex set of data, it’s important to consider the data you’re using and take into account what roles are being performed, and to what level.
If your company has generic job titles regardless of skill and experience level, then your Gender Pay Gap is unlikely to give you much insight on whether there is any inequality across your pay and remuneration strategy because the data will be too broad.