Reporting gender 'pay gap' is a welcome first step, but no cure-all

The director of the Wo+Men's Leadership Centre at Cambridge Judge Business School offers her verdict.

The UK’s new requirement for large firms to report their gender “pay gap” is a useful first step in taking broad stock of the gravity of this issue across different organisations and industries.

That said, the new rules fail to provide clarity on a crucial issue relating to the broader gender pay gap: equal pay for equal work. While the new rules paint a broad picture of all pay across an organisation, they don’t identify how much of this gender gap stems from differences in salaries paid to males and females for the same work, and how much of the gap relates to males and females holding different positions with different pay.

Regardless of the source, it is important to address this gender gap through concrete actions by companies, policymakers and key stakeholders such as investors.

A key step would be collective action in which various elements of society work together to improve gender balance in senior positions.

Organisations can and should take concrete steps to create more diversified talent pipelines at every level, as this can create a pathway for more women to reach senior executive and board-level roles.

This isn’t just a matter of equality, as important as that is; greater representation of women can improve the bottom line, as our research shows that gender diversity in top management teams can help firms implement innovative strategies by creating more psychological safety for such innovation to develop.

So while the new gender-gap reporting rules are far from a cure-all, they could stimulate the sort of broad thinking on this issue that leads to meaningful change.

This won’t happen overnight, but will require a lot of determination by men and women alike at all levels of business and society to address a historical injustice that is also harming corporate and organisational performance.

• Sucheta Nadkarni is Sinyi professor and director of the Wo+Men’s Leadership Centre at Cambridge Judge Business School.

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