Breaking the glass ceiling: Closing the gender pay gap with pay transparency

To increase the efficacy of salary transparency as a tool to combat the gender pay gap, the cost of publicly monitoring salaries must be reduced.

By making salary information more accessible, organisations are more likely to take steps to reduce the wage gap, according to new research conducted by Elizabeth Lyons of the University of California, San Diego; and Laurina Zhang of Boston University.

Zhang explained, “Improvement in the gender pay gap is really driven at the organisation level. It’s really about organisations that anticipate public scrutiny and perhaps backlash in the future, they’re more likely to implement institution-wide changes.”

The study, published in Strategic Management Journal, further pointed out that aggregate salary disclosure, which only provides average male and female salaries, can have a “muted effect” and is difficult to assess for gender inequality with information that does not specify the individual’s role.

READ: Gender-pay inequality persists worldwide despite progress

Embracing salary transparency and closing the gender gap are not without its costs, particularly in organisations with wide gender gaps. Equalisation of pay across genders will require these institutions to invest more, but as Zhang pointed out, “It puts a lot of pressure on organisations to enact change once they do so.”

The potential for salary transparency to increase competitiveness is also more likely to occur in the private sector, where movement across organisations are more common, the study concluded.