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Understanding Gender Pay Gap

Understanding Gender Pay Gap

The gender pay gap is the difference between men’s and women’s median annual earnings from full-time, year-round work. The International Labour Organization (ILO) estimates that women on average continue to be paid about 20 per cent less than men across the world. There are large variations between countries, from a high of over 45 per cent to hardly any difference, please see the figures below for different economies.

The gender pay gap is a measurable indicator of inequality between women and men. Most governments are trying to guarantee equality of treatment between men and women in remuneration. Yet, the gender pay gap persists and the World Economic Forum estimates it will take 202 years to close the global gender pay gap, based on the trend observed over the past 12 years.

What causes the gender pay gap?

Under-representation in leadership: Far fewer women than men are in management and leadership positions, especially at higher levels. This brings down the average salary of female managers compared to that of male managers.

Working hours: The gender pay gap is often a consequence of the different patterns of workforce engagement by women and men. The ILO highlights that women work on a part-time basis more than men do. This is often linked to women taking on more of the unpaid family responsibilities.

Career breaks: Women more than men are likely to take career breaks from their employment in order to raise children or care for the family. This means that when they return to work, they are likely to have fallen behind in advancement and in remuneration.

Education: Women still lag behind men in STEM areas that are associated with higher paid jobs. Even when women are qualified in STEM subjects, it can be challenging for them to obtain and maintain a job in these areas because they are traditionally male dominated.

Feminized jobs: Occupational gender stereotyping results in certain jobs being held predominately by women, and that leads to “female jobs” being undervalued for purposes of wage rate determination.

Benefits of closing the gender pay gap?

The benefits of women earning the same as men include an increase in their purchasing power which in turn helps stimulate consumer spending and the economy. According to a research conducted by ILO, across all economies that increasing gender participation adds a significant amount. The ILO estimates that reducing the gap in participation rates between men and women by 25 per cent by the year 2025, could raise global GDP by 3.9 per cent, or US$5.8 trillion.

What can organizations do to close the gender pay gap?

As a first step, recognition of the business benefits of improved gender diversity at all levels is critical as well as commitment from top leadership. More specific actions can be:

  • Promoting a gender-inclusive culture while adopting a holistic approach to equal remuneration for women and men for work of equal value.
  • Making equitable salary offers to men and women.
  • Undertaking a gender pay review to assess whether there is a gender pay gap and to what extent – conducting regular pay reviews can help a company keep on top of any inequalities.
  • Making jobs more flexible so that more women access higher-level jobs and, therefore, higher pay.
  • Ensuring that unconscious gender bias does not affect performance reviews. Selecting and applying a job evaluation methodology to assess the skills and responsibilities of the various jobs in the organization with a view to adjust job titles, contents and corresponding pay overtime.
  • Sharing the effort, results and benefits with the stakeholders in the organization’s ecosystem and being an inspiring example for others.

Ref: This brief is based on findings from the ILO report on Women in Business and Management: The business case for change (Geneva, 2019)

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Why the Demand for a Compensation Software is Increasing?

Why the Demand for a Compensation Software is Increasing?

According to various market researches done by several intelligence companies, the Global Compensation Software Market is expected to grow at a CAGR of 9% during the forecasting period of 2019-2026.  More than 50%+of the market share is originated from the Americas and the market in APAC is expected to register highest CAGR.  And Small/ Medium size enterprises are expected to show higher growth rate in demand than Large enterprise segment. In 2018, on-premises compensation software accounted for the significant share in the global compensation software market however demand for cloud-based compensation software is growing sharply and it is expected to witness the growth of over 12%, during the forecast period, which is higher than the overall market CAGR.

What are the key drivers in the Market? What is Changing?

Highly Attractive Benefits Offered by Compensation Software:

The benefits offered by compensation software, which includes optimized utilization of company revenue, enhancing positive reinforcement, boosting of employee performance, and improving company reputation during talent acquisition are expected to fuel growth in the market. On the other hand, automated compensation management process simplifies administration processes by reducing errors caused by manual work coupled with saving organizations’ money and time while improving efficiency and productivity.

Increasing Competitive Edge:

A smart compensation software helps organizations to take their strategy beyond numbers and budgets. It ensures that the incentives provided to employees are in line with the recent market trends, which helps organizations in maintaining low attrition rates. Moreover, employers can also identify top-performing employees by their work management, thus rewarding such employees for their effort. Also, it improves the workplace environment of the company, which plays a significant role in the performance and productivity of an employee. Thus, more companies are looking to adopt compensation software tools into their organizational activities to attract and keep top performers, build a solid employer brand and ultimately to sharpen their competitive edge.

Technological Advancements and New User-Friendly Software Launches by Market Players:

There is a clear shift from Core HR Suite to end-to-end Compensation Software since organizations do not want to rely on their core HR Suite and compromise their compensation strategy. A typical HR Suite can only manage certain aspects of a typical compensation process; thus, companies still manage some part of their processes offline, basically through traditional spreadsheets. But with the technological advancements and the smart offerings by “boutique' compensation software companies, the rules of the game are changing, more and more companies shifting their compensation processes out of their HCM.  Unlike HCM market, approximately one quarter of the Compensation software market is dominated by major global vendors who offers full HCM suite, (for HCM market it is more than 50%). The concept of ‘integration’ is surely helping this change, most of the compensation software can be easily integrated to ERP/ HRIS and allows organizations to leverage their investments in existing processes and systems.

Conclusion:

Nowadays, for any size of enterprise, for any type of compensation process, for any set of expectation, there is a compensation software available in the market. It is “the time” to manage employee compensation with confidence; the right tool can bring data intelligence, workforce agility and administrative efficiency to human resources while providing transparency of all compensation detail for reporting, total compensation statements and letters, and audit/ compliance reporting.

There is a compensation software out there which would help you to optimize the utilization of company revenue, to enhance positive reinforcement, to boost employee performance and engagement. Wishing you all the success and highest return on investment. For any queries/ feedback please feel free to reach out.

Thank you

Senem.Birim@compport.com

Co-founder/ Managing Partner Compport