Preventing and Tackling Gender Pay Gaps in Organizations

For HR and Compensation & Benefits (Comp & Ben) leaders, ensuring fair pay isn’t just about compliance—it’s about building a thriving, engaged workforce while safeguarding the organization’s reputation and bottom line. Persistent gender pay gaps can erode trust, impact retention, and even expose companies to legal and regulatory risks. With growing scrutiny from employees, regulators, and the public, tackling pay disparities isn’t just an ethical imperative—it’s a business necessity. Organizations that take proactive steps toward pay equity gain a competitive advantage in attracting top talent, fostering workplace diversity, and driving long-term performance.

Yet, despite efforts to promote fair compensation, gender pay gaps persist across industries. These gaps often arise from a mix of structural barriers, unconscious biases, and outdated compensation practices—many of which may not be immediately obvious. Left unaddressed, they can lead to disengagement, reduced productivity, and long-term reputational damage. Now more than ever, HR leaders have an opportunity to drive meaningful change by identifying pay gaps, addressing their root causes, and implementing sustainable solutions that ensure equitable pay for all employees.

For HR and Comp & Ben leaders, simply acknowledging an "explained" pay gap isn't enough. The real challenge lies in addressing why these gaps exist and taking action to remove barriers that limit equal opportunities for career growth and fair compensation.

Main causes of gender pay gaps

Gender pay gaps result from a combination of social, cultural, and structural factors within organizations, which may include:

• Purposeful discrimination: Intentional actions taken to disadvantage women can lead to less pay and denied opportunities.
  Research shows that some decision-makers are aware of their biased actions and may consciously prefer male candidates for leadership roles, even when women are equally qualified. 
• Unconscious bias: Unconscious biases stem from societal conditioning and culture rather than intentional discrimination and can impact decisions to negatively affect female employees.
  For example, managers may not have sufficient training to reduce gender bias and subconsciously make unfair decisions when evaluating performance or assigning projects. Without training or accountability, managers or recruiters may also be overconfident in their ability to make unbiased decisions.
• Lower-paid work for women: According to the United States Census Bureau, in 2021, women earned 84% of what men earned on average for full-time, year-round work, with pay disparities present across both traditionally female and male-dominated occupations.
  Despite increasing their presence in higher-paying fields like professional and managerial roles, women remain overrepresented in lower-paying jobs. Men are more likely than women to hold top management positions, with 28% of men compared to 21% of women in such roles.
  A 2022 Pew Research Center survey found that half of U.S. adults believe that women being treated differently by employers is a major reason for the gender wage gap. 
• Family responsibilities: Women are more likely to engage in family responsibilities, such as domestic work or care for children or elderly relatives, which leaves fewer opportunities for paid work. In the EU, for example, the share of female part-time workers (28%) is significantly higher than the share of men (8%). 
• Fewer executive positions: Women hold a disproportionately small share of executive positions, which is generally caused by longstanding stereotypes and biases about women’s roles in society.
  Women are frequently perceived as lacking the qualities traditionally associated with leadership, and, as researchers in a study on servant leaders note, “When people think of a strong leader, many people subconsciously picture a man because of persistent stereotypes of men as commanding and goal-focused,” and “because they’re seen as more caring and people-focused, women have always faced a disadvantage—or outright discrimination—as leaders.”
• Unequal access to opportunities: Women face limited access to work opportunities partly due to gender disparities in professional networking. LinkedIn data reveals that men generally have larger and stronger networks than women. As stronger networks are linked to higher chances of career progression and greater recruiter outreach, men have an advantage in accessing better job opportunities.
• Negotiation skills: Research has consistently documented a gender gap in negotiation performance, which studies have argued is caused by either women conforming to stereotypical behaviours or backlash against women for defying those stereotypes.
  One study found that men were more likely to negotiate wages in job postings where the negotiability of wages was ambiguous, which widened the gender gap in job applications and potential earnings. Another study’s findings suggest that women often face a ‘social penalty’ for negotiating, as they may be labelled as aggressive, whereas men likely won’t be.

Consequences of gender pay gaps 

Gender pay gaps can negatively impact organizations, as female employees who perceive inequity in compensation may lose morale and trust due to feeling undervalued for their contributions. 

A perception of unfairness can extend to male employees, who may question whether the organization compensates them fairly based on other factors, such as race or age.

A wide gender pay gap can lead to additional challenges, including: 

• Reduced retention: Perceived inequity often results in higher turnover rates, as employees will choose to find fairer work opportunities in other organizations.
• Reputational damage: Inequitable pay practices cause long-term reputational damage by impacting how the organization is perceived regarding its progressiveness and fairness.
• Recruitment challenges: Valuable job seekers will be less likely to join organizations with a record of unequal compensation.

Legal consequences 

Organizations may face legal consequences for gender pay gaps, depending on their jurisdiction.

Various regulations exist around the world to address pay inequities, including:

Europe:

• CSRD: Employers with more than 250 employees are required to report on pay practices, including their gender pay gap. They must also disclose details on gender diversity in top management, the number of board members from underrepresented genders, and the implementation of gender diversity policies.
• EU Pay Transparency Directive: Employers with at least 100 employees must publish information on the gender pay gap. If the gap is 5% or higher, they must work with employee representatives or works councils to analyze the issue and create a corrective action plan.
• UK’s Local Gender Pay Gap Reporting System: Employers with 250 or more employees must report their gender pay gap data annually, calculating the mean and median gender pay gap for hourly and bonus pay and the percentage of men and women receiving bonus pay.

United States:

While there is no federal gender pay gap reporting requirement, several laws promote pay equity:

• EEO-1 Pay Data Reporting: Large employers (100+ employees) and federal contractors must submit demographic and pay data to the Equal Employment Opportunity Commission (EEOC) to identify potential pay disparities.
• State Pay Transparency Laws: States like California, New York, and Colorado require salary disclosures in job postings and detailed pay reporting for larger employers.

Canada

Pay transparency and pay equity laws are in place at both federal and provincial levels:

• Federal Pay Equity Act: Requires federally regulated employers with 10+ employees to ensure equal pay for work of equal value.
• Provincial Pay Transparency Laws: Several provinces, including Ontario and British Columbia, mandate pay transparency in job postings and reporting on pay gaps.

As pay equity regulations expand across North America and Europe, organizations must take proactive steps to mitigate risks, enhance workplace fairness, and maintain a strong employer reputation.

Best practices for addressing and preventing gender pay gaps in your organization 

HR systems can support women’s equality by reducing gender pay gaps and helping to maintain an equitable and inclusive working environment. 

Through HR, organizations can engage in the following processes:  

1. Actively identify gender pay gaps 

Organizations can identify gender pay gaps by calculating the difference between the average or medium earnings for employed men and women. 

Conducting yearly reviews, which focus on the distribution of promotions, bonuses, and salary increases, can highlight any instances of gender discrimination or identify other pay disparity or inequity issues.

Through this process, organizations can locate where disparities are most prevalent and implement targeted actions to address them. 

For example, the hiring process may be equitable and fair, with both women and men being offered equal starting pay. However, there may be unconscious bias in promotional decisions, where women's qualifications and efforts might be overlooked.

Even with equal opportunities and compensation during recruitment, discrimination during career progression can increase the organization’s gender pay gap. 

Addressing the pay gap requires fair treatment in all stages of employment rather than a single stage. 

Analyzing data related to recruitment, compensation, promotions, and bonuses before implementing changes and policies helps organizations target areas that require improvement rather than making unfocused changes that don’t address the root causes of the pay gaps. 

2. Reassess hiring processes 

HR teams can implement practices such as blind resume screening and diverse interview panels to prevent biased hiring decisions that contribute to gender pay gaps. 

Recruiters and hiring managers should be trained to recognize unconscious bias and discrimination, helping them recognize any unfair advantages or disadvantages caused by stereotypes and assumptions.

Other actions can include revising job listings to use gender-neutral language and offering flexible work options when possible.

HR should regularly review hiring decisions to identify trends, ensuring that applicants of all genders are treated equally and that hiring decisions are based solely on experience and skills rather than subjective opinions or discriminatory practices. 

3. Establish transparent and consistent promotion practices

Refining promotion practices to ensure decisions are based on objective measures of performance and potential will further help close gender pay gaps within organizations.

Regular interviews with employees, managers, and others can provide valuable feedback on their experiences and shed light on how leaders and managers select candidates and assess performance. Anonymous surveys can be used to encourage honest feedback, particularly among groups who feel hesitant to speak openly in interviews. 

If employees are unclear about expectations or have raised concerns, managers should be encouraged to clearly communicate role requirements and explain how employee performance will be evaluated.

Employees should also have opportunities to ask questions about promotion decisions and receive support to seek further feedback when needed, ensuring everyone understands what is required to progress within the organization.

Finally, HR should continuously monitor promotion rates and decisions to ensure fairness and identify potential biases by particular individuals so that further preventative action can be taken. 

4. Discourage forced negotiations

As women are less likely to negotiate, they may accept offers below or at the lower end of the budgeted salary range, resulting in reduced pay compared to their male counterparts.

One study showed that when job advertisements clearly stated that wages were negotiable, the gender gap in job applications narrowed by about 45%, as both men and women were equally likely to negotiate their salaries and showed similar reluctance to accept lower pay. These findings demonstrate that transparent communication about negotiable wages can help reduce pay gaps during recruitment. 

In promotion negotiations, women may be overlooked for opportunities, or their efforts to negotiate may be undervalued, leading to slower career advancement than their male counterparts. 

Organizations should adopt a system where pay increases are based on regular performance assessments and are granted based on objective criteria to ensure that salary adjustments are fair and based on merit rather than pressuring employees, particularly women, to negotiate.

5. Promote pay transparency

Organizations can remove perceptions of unequal pay and improve trust in decisions by being more transparent about pay and openly sharing compensation information with employees.

HR can encourage pay transparency by educating managers and decision-makers on how to discuss pay openly and take ownership of compensation decisions, as well as informing employees on how benchmarking and comparative pay practices work.

Pay transparency provides organizations with clear insights to address gender pay gaps and facilitates effective communication of salaries, bonuses, benefits, and equity. Such software reduces uncertainty, highlights pay disparities, and helps all employees stay motivated.

6. Provide flexible working opportunities 

Many women often work reduced hours or take breaks from their careers to manage family responsibilities, which can prevent them from advancing in their careers at the same rate as their male counterparts.

beqom’s 2025 Compensation and Culture Report revealed that 72% of employees would switch jobs for more flexible working hours and 52% would leave for an employer that did not mandate in-office attendance.

By offering flexible schedules and remote work options, organizations can help women advance professionally without sacrificing their personal or family commitments.

These arrangements can prevent career stagnation caused by time constraints, enabling women to continue pursuing promotions, skill development, and leadership roles while allowing organizations to close gender gaps that often arise from unequal access to career progression.

Leverage advanced HR software to identify, address, and prevent gender pay gaps 

Closing pay gaps requires an ongoing effort from organizations to benefit from the advantages of equitable compensation and to demonstrate the positive impact of offering equal pay for equal work.

Pay equity and performance management software can assist organizations in managing compensation and identifying unfair or inequitable practices and decisions. PayAnalytics by beqom’s software allows HR teams to more effectively address disparities and closely monitor hiring, promotion, and compensation decisions to tackle and prevent gender wage gaps.