Gender Pay: Top tips for reducing pay gaps in 2025
Every organisation is different and brings its own challenges and nuances when it comes to its Pay Gap. There is no universal solution to closing a gap, but there are some common steps and fail-safes that we are recommending to our clients as we move into the new year: first in how to structure things and then in ongoing best practice.
Build a robust Reward Framework
- Job Evaluation
It is very difficult to flag potential pay gaps without having a framework in place that enables you to differentiate one job from another. In businesses with long-serving individuals or complex structures it is not uncommon for two roles at the same level to be paid very differently. If this sounds familiar in your own company, do you have a clear rationale for such a difference that makes it justifiable and defensible? If you don’t, a job evaluation exercise will help.
There are different kinds of Job Evaluation frameworks. Ideally you would use an analytical system like our own Evaluate tool that enables HR and business leaders to look at the key requirements of a role in order to establish the overall value it brings.
- Pay Benchmarking
Do you really understand how your pay compares with other companies in the market? A Pay Benchmarking exercise involving a strong salary survey methodology is the key to this.
Ideally you would ally this with a compensation philosophy that determines where you would like to position your pay in the market, which can vary by role. For example, if your business relies heavily on commercial roles, it might rank them as 'critical' and pay upper quartile, while paying market median for less critical or more easily replaceable functions.
The process of understanding how roles compare against the market also helps identify where gaps exist, particularly in the same role for people doing the same work. Using technology tools like our Paylab tool can speed up this analysis and help quickly identify your position in the market as well as any internal pay gaps.
Continually measure Performance and Pay Structures
If Job Evaluation builds your car and Pay Benchmarking is your annual MOT, you still need your regular servicing and maintenance to keep the engine ticking over nicely. These checks and balances should be regular, consistent and objective, including pay equity analysis reporting at least every other year. This will keep clarity and relevance in your pay ranges and ensure pay gaps can’t creep in or worsen, while also supporting management of pay progression and promotions.
Here are our four key areas to focus on:
- Review Pay Equity by department and level
Try not to shy away from asking the tough questions: Which of our job levels have obvious pay differences? Can we justify where pay is generally higher in specific departments? Are these departments made up predominantly of one ‘type’ of employee, such as male or white? How can we begin to tackle these imbalances where they exist?
- Scrutinise when pay increases are being made
Out-of-cycle increases are not always well monitored and can be a key contributor to pay gaps. Do you know how much you spend out-of-cycle, and who it goes to? If your answer is ‘no’, you will struggle understand the impact this approach is having on your pay gaps.
- Audit internal progression and promotion
Whether it is a regulatory requirement or not, knowing the percentage of men vs women or white vs ethnic minority employees receiving internal promotions and pay increases is a key statistic. As HR professionals do you have this data to hand? Similarly, knowing how long these employees occupy roles before being considered for promotion, and at what level, will give you a more rounded appreciation of your position and pay gap risk profile.
- Think recruitment
When was the last time you reviewed your approach to advertising? Consider the language and imagery being used in your ads, and whether it is unwittingly turning off swathes of the market. Are new appointments inadvertently creating gaps by causing existing staff to fall behind, especially in a moving market?
Pay gaps can only worsen if left unchecked. Mostly they reflect issues with distribution and not a disregard for workers or regulations, but taking the time to consider changes to mindset, policies and practices can have a positive impact on every company.
If you could benefit from help or advice in this area in 2025, please contact Justine.Woolf@innecto.com.
