The gender pay gap remains a persistent challenge in workplaces worldwide, with women still earning significantly less than men for similar roles. Despite strides in promoting gender equality, the gap continues to hinder progress, not only for individuals but for businesses and economies at large.
To delve deeper into this segment, BW People got into an exclusive conversation with Anupam Kaura, CHRO, Kotak Mahindra Bank.
1. What are the most common factors contributing to the gender pay gap in corporate environments?
The gender pay gap in corporate environments persists due to several interacting factors. Past pay (prior employments) trajectory, pay negotiations during hiring discussions, inequity in promotion and growth opportunities, career breaks, and biases (both conscious and unconscious) could play a role and they also end-up being linked to one another in some situations.
A critical issue is the lack of pay transparency and equity guidelines. According to an AON report, only 58 per cent of organisations in India conducted Pay Equity Analysis in 2023-24. This absence of clear guidelines makes it challenging for employees to identify and address gender-based pay discrepancies.
Addressing these interconnected issues requires a multi-faceted approach to ensure fair compensation practices across genders.
2. How can companies conduct effective pay audits to ensure equal compensation for all genders? Further, how does it help in increasing retention rates amongst employees?
Companies should consider setting a calendar for periodic reviews that analyse compensation data with granularity, examining salaries, bonuses, and other forms of remuneration across all job levels, departments, and divisions. This analysis should focus on identifying unjustified pay disparities between men and women in comparable roles, considering factors such as job responsibilities, qualifications, performance, and tenure.
Communicating insights from such analysis and action plans with employees periodically helps build trust and demonstrates commitment to fairness. This approach can significantly improve employee retention, especially among women who might otherwise seek opportunities elsewhere if they feel undervalued or unfairly compensated.
For instance, at Kotak, pay parity is reviewed alongside the annual compensation planning cycle, with specific process nuance that ensures gender biases are kept under check.
Companies that prioritise pay equity and maintain a reputation for fair compensation practices are better positioned to attract and retain top talent, giving them a competitive edge in the market.
3. What role do transparency and open salary discussions play in achieving gender pay equality?
In India, pay transparency practices are still evolving, lagging behind the United States and some European markets. According to recent data*, approximately 80 per cent of organisations in India limit pay transparency to internal stakeholders such as senior leadership and board members. This lack of openness extends across industries and ownership structures, with little variation between listed and non-listed companies.
Most Indian organisations do not disclose any compensation information externally, except for regulatory requirements mandating listed companies to reveal senior leadership compensation levels. Only a small percentage of organisations proactively share gender pay gap reports in their annual or special reports. Kotak Mahindra Bank publishes grade-wise gender pay ratios in line with Business Responsibility and Sustainability Reporting (BRSR) standards.
As global trends move towards greater transparency, Indian companies may need to adapt to remain competitive in attracting and retaining talent, especially as awareness of gender pay issues grows among the workforce.
*Source- AON Report 2023-24
4. How can corporate leadership be held accountable for addressing and closing the gender pay gap?
Corporate leadership can be held accountable for addressing the gender pay gap through several mechanisms:
1. Transparency and reporting: Requiring companies to regularly publish comprehensive pay data broken down by gender, job level, and function enables external scrutiny and holds leadership accountable.
2. Shareholder and investor pressure: Shareholders and investors can use their influence to demand that companies prioritize pay equity. This can include submitting shareholder proposals, voting on executive compensation, and engaging directly with company leadership.
3. Board oversight: Corporate boards can establish committees specifically focused on diversity, equity, and inclusion, including pay equity.
4. Performance metrics: Incorporating gender pay equity goals into executive performance evaluations and compensation packages can create direct accountability.
5. Public commitments: Encouraging companies to make public pledges on closing the gender pay gap, with regular progress reports, can create accountability through reputational stakes.
5. What legal frameworks exist or need to be enforced in gender pay equality in the corporate realm, and how can companies ensure strict vigilance over this compliance?
While specific legal frameworks for gender pay equality in India are evolving, companies like Kotak are proactively implementing policies to ensure fair compensation practices. Kotak's commitment to diversity and inclusion is reflected in their Diversity, Inclusion and Equity (DIE) statement.
As declared in Annual Report, the current gender diversity at 26.2 per cent, the Bank has been actively focusing on increasing participation of women with an aspiration to have women represent at least a third of our workforce Kotak recognizes the value of a diverse workforce and aims to create an inclusive are treated with respect and dignity
To ensure compliance and promote gender pay equality, Kotak:
1. Adopts fairness and transparency in recruitment, pay, and career progression
2. Formulates gender diversity goals with monitoring systems
3. Encourages open communication and develops robust grievance mechanisms
4. Strengthens leadership accountability for diversity, inclusivity, and equity
5. Conducts periodic training and communication on DIE issues
6. How can organisations address unconscious biases that contribute to gender disparities in compensation?
Organisations can address unconscious biases contributing to gender disparities in compensation through a combination of cultural initiatives and systemic processes. At Kotak, several actions have been implemented:
1. Unconscious bias training: Comprehensive training is provided for all employees, especially those involved in hiring, promotion, and compensation decisions. This raises awareness and equips staff to recognize and mitigate their own biases.
2. Inclusive culture and feedback mechanisms: The Bank has launched an inclusive culture program focused on building a more equitable workplace by exploring key concepts of diversity, equity, inclusion, and belongingness, including implicit and explicit biases, inclusive practices, emotional intelligence, and allyship.
3. Diversity in leadership: Ensuring diversity in the leadership team and decision-making bodies helps mitigate the influence of unconscious biases.
4. Pay equity monitoring: In line with BRSR standards, annual in-depth gender pay equity analysis and reporting is done at grade-level with corrective actions taken where necessary.
7. What are the benefits of implementing equal pay practices from both a business and ethical standpoint?
From a business standpoint, organizations generally agree that pay transparency positively impacts the employer brand (4.2%)*, improves employee engagement (by 5.7%)*, and enhances talent attraction and retention (by ~3%)*. These figures underscore a clear business value proposition from a talent perspective.
Ethically, fair pay practices contribute to a more respectful and supportive work environment. By committing to equitable compensation, businesses demonstrate their dedication to social responsibility and contribute to a more just society. This ethical stance can boost employee morale, increase job satisfaction, and foster a sense of loyalty among staff.
Moreover, companies known for fair pay practices often enjoy enhanced reputation and brand value, which can translate into improved customer relationships and potentially higher revenues. From a risk management perspective, implementing equal pay practices can help companies avoid costly discrimination lawsuits and negative publicity.
*Source: AON Report 2023-24
8. How can companies promote a culture of fairness and inclusion to support gender pay equality in the long term?
Companies can implement several strategies:
1. Leadership Commitment: Secure visible support from top executives and create accountability structures like diversity and inclusion committees.
2. Regular Pay Audits: Conduct frequent pay audits to identify and address disparities.
3. Fair Recruitment and Promotions: Use standardized criteria for hiring and promotions, include diverse perspectives on panels, and ensure inclusive job descriptions.
4. Development Opportunities: Provide equal access to training, mentorship, and leadership development programs.
5. Inclusive Work Environment: Foster a culture valuing diverse perspectives and address harassment and discrimination.
6. Continuous Education: Offer regular unconscious bias training and promote awareness about gender pay equality.
7. Policy Monitoring and Adjustment: Regularly review and adjust policies based on effectiveness and employee feedback, especially from a DEI perspective.
8. Work-Life Balance: Provide flexible work arrangements to support employees balancing professional and personal responsibilities.
