There’s a brand new piece of research dedicated to showing the power of salary transparency.
Pay transparency has been the subject of a number of conversations in the Global Women universe — among our Champions for Change, our Members, our wider orbital communities — so it’s no surprise that we’re interested in hearing the exact outcomes it can have for women.
Spoiler alert: it’s looking positive for women’s pay equity.
In this study, researchers at University of California San Diego’s School of Global Policy and Strategy looked at how universities in Ontario, Canada fared after publicly releasing the salaries of those who made over $100,000. This comes after a policy implemented in the 90s made it a requirement for organisations to report for this income level.
“…The data did not reveal changes at the individual level” — Laurina Zhang, School of Global Policy and Strategy, University of California San Diego.
The research found that those who made pay information publicly available during the 24 years increased pay for women employees by roughly 4%. As for the universities that kept it behind closed doors? They did not increase their pay for women employees.
This study also debunked some popular ideas around how pay transparency stirs up change. It didn’t so much a baseline number that women can use as leverage to negotiate a higher pay. Instead, it revealed how doing so sets an organisational tone.
“We expected that salary transparency would reduce inequality because females were going to see what their male counterparts were making and try to negotiate for more equal pay, but the data did not reveal changes at the individual level,” Laurina Zhang, co-author of the study, said.
“Universities most likely to anticipate higher scrutiny… responded more aggressively and quickly to improve gender pay equality” — Elizabeth Lyons, School of Global Policy and Strategy, University of California San Diego.
“We find that when there is a standardisation process that makes searching for compensation information very easy, then organisations as a whole have an incentive to improve equality to reduce the threat of public scrutiny,” shares Elizabeth Lyons, Associate Professor of Management at the School of Global Policy and Strategy.
Interestingly, she shared that status had a part to play for some institutions. “Universities most likely to anticipate higher scrutiny, such as top ranked institutions, responded more aggressively and quickly to improve gender pay equality by slowing the growth of male salaries as well as by increasing female pay.” It’s a good reminder of the power of privilege – even as an organisation — and leading by example.
For more information on this study, read more on UC San Diego’s site or access the full paper: Salary transparency and gender pay inequality: Evidence from Canadian universities here.