The Gender Pay Gap: What The Median Pay Gap Says About Your Company

Part 1

a)

Introduction

            Exhibiting imbalance in pay because of gender has a negative effect on a company because it represents embedded discrimination, barriers and stereotypes in the opportunities that should be accorded to women (Lips, 2013). Therefore, it is important to address this ethical issue by applying adequate steps to lead to a positive outcome for the company. If this issue is not addressed amicably, it can influence the perceptions of external stakeholders whereby they can think that the organisation embraces non-progressive reasoning, and this may have wider consequences on the reputation of the company. Bennedsen et al. (2019) state that the gender pay gap is an ethical concern because it deals with the fundamental constitutes of fairness. It is believed that those that do the same jobs need to be paid equally without dwelling on their gender. This basic notion underlies the concern that this company should consider with regards to the gender pay gap.  

           In the UK, the issue of gender pay gap has been addressed by implementing a mandate that requires pay transparency whereby companies with 250 employees or more need to publish details concerning the gaps in pay between female and male employees (Bishu and Alkadry, 2017). For instance, IBM UK practices equal gender pay by releasing annual reviews that assess and analyse the pay fairness across peer groups and identifies inequalities then takes relevant action to address the issues (Lips, 2013). As a result, the company has shown that its gap originates from a low percentage of women in high paying senior roles. This assessment has affirmed the positive outlook of the company because it has shown that it cares for the equality of men and women within the workplace. Furthermore, stakeholders show increased confidence in a company that places such important ethical dilemmas into consideration (Bennedsen et al., 2019). 

           According to Bishu & Alkadry (2017), the gender pay gap influences the performance of an organisation and its workplace culture. Therefore, companies that address the pay gaps will eventually pay less in terms of the cost of meeting the Equal Pay Act as compared to companies that fail to take action. For instance, the EasyJet Company revealed a 48 percent difference between female and male employees’ pay which is one of the greatest gaps for a firm that has over 5000 employees (Lips, 2013). Furthermore, the airline’s pilots are mostly male. On the other hand, the British Airways has a 10 percent gender pay difference, and evidently, this has affected the brand reputation for the latter because customers have become more ethically aware of these type of choices and this currently affects their spending decisions (Bennedsen et al., 2019). 

Identification of Key Stakeholders and the Impact on Them 

           The case that is being examined is the Gender Pay Gap: What The Median Pay Gap Says About Your Company in which the key stakeholders are the employers, the investors, the male and female employees, and the customers. The employers are affected by the ethical issues that arise from the gender pay gap because the performance of the business, the brand image, and the workplace culture of the organisation are affected (Brynin, 2017). If a firm formally prioritises on gender pay equity, there are increased chances of improved performance because of the raised morale of the employees. For the investors, gender pay equity affirms the bottom line because when the employees feel like they are fairly rewarded, they tend to become more motivated and engaged and this leads to increased retention rates, enhanced ability to attract individuals with top talent, improved customer orientation, better decision making and employee satisfaction (Ellwood et al., 2020). 

           O’Reilly et al. (2015) pointed out that firms that prioritise gender pay equity have an increased likelihood of gaining financial returns that supersede the national industry medians. The employees are affected by the gender pay gap because most women employees would prefer to work for an organisation that practices gender equality than if the male colleagues in a similar position received more salary than them which would otherwise indicate discrimination within the company (Williams and Adams, 2013). Such statistics radically understate the possibility of gender discrimination to suppress the earnings of women. Brynin (2017) argues that gender pay gaps in various occupations is an ethical concern because it indicates that irrespective of the years of experience, education, and hours worked by a woman, they are often overlooked compared to a man.   

           Suppose a company has a positive reputation for acceptable ethical behaviour. In that case, it can help create a positive image within the business environment, which will help attract new customers through referrals (Ellwood et al., 2020). For instance, Unilever UK is one of the companies to report an almost equal gender pay whereby their mean pay was 1.9 percent (O’Reilly et al., 2015). Due to its equal opportunities to both men and women, the company’s reputation has improved in the UK, and more professionals seek to work in the company. Furthermore, customers have become more inclined to purchase the company’s products because of the positive association with its focus on equality in the workplace. 

           Non-ethical actions by an organisation usually affect employee relations, damage the credibility of a company, and affect the performance of the employees (Williams and Adams, 2013). The British American Tobacco company, for instance, has indicated higher prevalence on men in the top, high paying positions as compared to women which have worsened their gender wage gap and have led consumers to assume that the company is more inclined to men as compared to women (Brynin, 2017). Hence, their products have a higher percentage of males purchasing them as compared to females because their reputation seems to indicate that their product is male-focused. Therefore, the company’s lack of addressing the issue of the gender wage gap as an ethical issue has affected its profit performance and its overall reputation in the UK negatively.   

Recommendations for Company Emerging from Analysis 

           Smith (2018) notes that a workforce may act unethically if they perceive the company to be unfair; for instance, the wages fail to be shared fairly, or the procedures and policies are inconsistent. Therefore, in order for the company to act ethically, it needs to include more women in their shortlists for promotions and recruitments (Hatcher, 2010). This means that more than one woman needs to be considered in a shortlist so that the chances of being hired can be increased. This will reduce the gender pay gap, especially in the top decisions since these are the positions that widen the gender wage gap. 

           The company needs to encourage salary negotiations by revealing the salary ranges (Alwi et al., 2017). This is because women have a lower probability of negotiating their salary due to the fact that they are unsure of a reasonable offer that they should suggest. Therefore, the company’s hiring department needs to reveal the salary range on offer to the role so that women can be encouraged to negotiate for their salary (Ferrel et al., 2019). Furthermore, this assists the female applicant to know reasonable expectations set by the company.  

           The company should also advertise all available jobs by indicating their flexibility, for instance, remote working, part-time work, compressed hours, and job sharing so that the workplace flexibility can be improved for both women and men (Orts and Smith, 2017). Furthermore, men should be encouraged to work flexibly so that they cannot perceive it as a sole female benefit. 

           Mentoring and sponsorship should be offered to the employees so that the need for gender pay gap can be eliminated (Smith, 2018). The mentor can offer advice and guidance to the mentee while the sponsor can support the visibility and advancement of an individual being sponsored. It has been found that mentorship programs are essential for women compared to men (Hatcher, 2010). This will ensure that women are empowered. The company’s recruitment team can learn the benefits of according the same importance to women as is to men so that they can be deemed equal and deserving to same salary rates.  

b)

Application of Two Ethical Theories

Utilitarian Theory

In a society whereby gender equality is a key concern, the presence of a gender pay gap between women and men is a crucial ethical issue (Jain, 2020). The utilitarian ethical theory relies on an individual’s ability to predict the outcomes of a specific action (Smart, 2020). Considering the tenets of utilitarianism, it is evident that gender wage gap is an ethical dilemma due to the fact that it shows both long and short term negative consequences that affect a company and society in general. For example, if a firm discriminates against a person with regards to their gender, it risks losing an employee that is competent and efficient to the company. If this is analysed through the aspect of act utilitarianism, specific consequences of such a discriminatory act can be found, especially if the organisation pays a woman less than a man for a similar job position. 

           The employees are vital stakeholders in a company; hence if female employees feel like they are less valued in a company, they are likely to seek alternative options of employment in other companies. Based on the utilitarian theory, discrimination can lead an individual to consider options that may not be beneficial to a company (Smart, 2020). For instance, a company that fails to value the implementation of discriminative policies such as gender pay equality will lose valuable employees because they lack satisfaction.   

           According to Smart (2020), in business, utilitarianism asserts the obligation for an organisation to implement actions that maximise happiness and minimise suffering. Therefore, utilitarianism offers the basis for criticising the behaviours of a business that may harm anyone. Implementing gender pay equality does not just benefit the female employees. Still, it also affects the organisation as a whole because it builds its reputation as a fair company that adjusts to the needs of the employees. At the same time, the customers will become attracted to a company that considers such ethical issues, especially since gender wage equity has been a topic of concern within society. 

           It is evident from this theory that it is ethical to choose from the greatest number because it not only serves the benefits of the company but for other stakeholders as well that share similar interests on specific ethical viewpoints (Jain, 2020). Nonetheless, aspects of the utilitarian theory may not be favourable to a business culture because the tenets of running a successful company require that the objectives be given priority so that it can flourish. Hence, utilitarian theory only focuses on the simple constructs of morality by considering what is wrong or right without accounting for the business aspects set to make a company attain success. For example, even though it is morally right to pay both male and female employees equally if they share a similar job position, factors like the workload covered by each individual and the quality of work done are not considered. Yet, this may be some of the considerations a company has applied to determine how the employees should be paid. 

Deontology Theory 

           The theory of deontology implies that actions may be bad or good based on a particular set of rules (Lazar, 2017). The timely response to an ethical concern such as the gender pay gap is by clarifying the values of the organisation and society. It is important to note that the deontological approaches to ethics start with an assumption that any action can be inherently wrong or right (Sison et al., 2018). This means that an action is considered right if it complies with the rules and wrong if the rules are not followed. Subsequently, it can be assumed that the drive for gender pay equality implements the ideologies of this theory. Moreover, the theory asserts that each needs to be treated equal because they have a moral right to it (Lazar, 2017).  

           A gender pay gap is a form of discrimination, and this is considered morally wrong based on the deontological critique that asserts that one must not account more for themselves as compared to others because it means the rules are not equally applicable (Loke, 2017). Based on this theory, the gender pay gap is morally wrong due to the fact that it implements differential treatment on the grounds that are morally irrelevant. In this case, a company like EasyJet discriminates against men by paying women 21 percent more because of the nature of their work in the organisation (Sison et al., 2018). As a result, the reputation of the company has suffered because aspiring employees already have the preconception of the wage inequality within the company. As a result, the company has lost the potential of attracting highly skilled employees that would have otherwise elevated its performance. 

Summary 

           The concept of deontology asserts that an action’s morality depends on its alignment with moral norms, while the concept of utilitarianism states that an action’s morality depends on the consequences (Lazar, 2017). The moral dilemma in the gender pay gap is as a result of the variations in affective responses that threaten cognitive evaluations. By assessing the gender pay gap and how the company responds to such dilemmas whereby the action causes harm and moral dilemmas where action prevents harm, the gender pay gap will reflect harm aversion or if such differences reflect gender differences in the underlying aversion to acting (Sison et al., 2018). 

           Lazar (2017) argue that deontological moral decisions usually meditate on an adaptive strategy that seeks to show trustworthiness as part of social interaction. At the same time, utilitarian decisions convey logical processing and competence (Smart, 2020). Therefore, the constructs of the utilitarian theory are more preferable when it comes to explaining and understanding the ethical aspect of the gender pay gap. This is because the theory shows that it considers how other stakeholders will react to the judgements of the company and refrain from instigating immediate harm to the affected gender. For instance, the utilitarian theory can be noted in how IBM UK has decided to act on reducing the gender pay gap. The company has made efforts to close the gender pay gap by employing more women in top positions who receive equal pay to their male counterparts; this has reduced the gap significantly and has also elevated the company’s reputation when it comes to gender equality. This is based on the moral decision that it is the right thing to do because the company values the moral issues of society and understands the positive outcomes that will arise from the same. 

References

Alwi, S.F.S., Ali, S.M. and Nguyen, B., 2017. The importance of ethics in branding: Mediating effects of ethical branding on company reputation and brand loyalty. Business Ethics Quarterly, 27(3), pp.393-422.

Bennedsen, M., Simintzi, E., Tsoutsoura, M. and Wolfenzon, D., 2019. Do firms respond to gender pay gap transparency? (No. w25435). National Bureau of Economic Research.

Bishu, S.G. and Alkadry, M.G., 2017. A systematic review of the gender pay gap and factors that predict it. Administration & Society, 49(1), pp.65-104.

Brynin, M., 2017. The gender pay gap. Equality and Human Rights Commission Research Report, (109).

Ellwood, S., Garcia-Lacalle, J. and Royo, S., 2020. The shattered glass ceiling and a narrowing gender pay gap in NHS foundation trusts: Gender and salaries of chief executives. Public Money & Management, 40(1), pp.31-41.

Ferrell, O.C., Harrison, D.E., Ferrell, L. and Hair, J.F., 2019. Business ethics, corporate social responsibility, and brand attitudes: An exploratory study. Journal of Business Research, 95, pp.491-501.

Hatcher, T., 2010. Ethics and HRD: A new approach to leading responsible organisations. New York, United States: Basic Books.

Jain, H., 2020. Mandatory Corporate Social Responsibility: A Utilitarian and Deontological Perspective. Open Journal of Business and Management, 8(5), pp.2278-2284.

Lazar, S., 2017. Deontological decision theory and agent-centered options. Ethics, 127(3), pp.579-609.

Lips, H.M., 2013. The gender pay gap: Challenging the rationalisations. Perceived equity, discrimination, and the limits of human capital models. Sex Roles, 68(3-4), pp.169-185.

Loke, S.P., 2017. A structural approach to ethical reasoning: The integration of moral philosophy. Electronic Business, 16(1).

O’Reilly, J., Smith, M., Deakin, S. and Burchell, B., 2015. Equal pay as a moving target: International perspectives on forty-years of addressing the gender pay gap. Cambridge Journal of Economics, 39(2), pp.299-317.

Orts, E.W. and Smith, N.C. eds., 2017. The moral responsibility of firms. Oxford University Press.

Sison, A.J.G., Ferrero, I. and Guitián, G. eds., 2018. Business ethics: A virtue ethics and common good approach. Routledge.

Smart, J.J.C., 2020. Utilitarianism and its applications. In New directions in Ethics (pp. 24-41). Routledge.

Smith, J., 2018. Efficiency and ethically responsible management. Journal of Business Ethics, 150(3), pp.603-618.

Williams, S.J. and Adams, C.A., 2013. Moral accounting? Employee disclosures from a stakeholder accountability perspective. Accounting, Auditing & Accountability Journal. 26(3), 449-495.

Part 2

The Qualities Recognised for Ethical Leadership and The Creation of an Ethical Organisation

            According to Engelbrecht et al. (2017), a manager’s ethical role includes serving the shareholders’ interests because it is their ethical duty to comply with this fiduciary obligation so that the shareholder wealth is maximised. Business decisions influence stakeholders; therefore, it can be concluded that such decisions are based on ethical content and that the managerial decisions, action, and behaviours are subsequently ethical in nature (Lin and Liu, 2017). The impacts of a managerial decision and action are presumably based on ethical aspects to that situation or decision; hence, the managerial role cannot be independent of ethics.

           I believe that a manager’s ethical role is like being a moral manager and a moral individual at the same time. A moral person has mannerisms such as trustworthiness, integrity and honesty, which prompt behaviours such as being concerned for other people. One of the principles of ethics involves performing the right actions, specifically under difficult circumstances that involve reasoning well about the right action to execute (Feng et al., 2019). I have learned that in order to reason appropriately especially about a complex ethical situation such as the gender pay gap, one needs to be susceptible to learning from multiple perspectives about the current situation while also ensuring that people are not harmed when relevant decisions are made. For example, the decision that is made in the company about closing the gender pay gap involves acting as an ethical manager by assisting the firm in making the right decision regarding what strategies can be applied to ensure gender pay equality and the senior managers can act like ethical leaders by implementing the decision to promote gender pay equality for the benefit of the company.

           Asif et al. (2019) state that ethical leadership involves a style of management that is compliant with an organisation. One of the importance of implementing ethical leadership in the company is the promotion of a positive culture whereby the morale of the employees improves when working with an ethical leader. For instance, as a manager, I can apply ethical decisions to inspire the employees to work harder. In this case, advocating for gender pay equality is bound to inspire the female and male employees to recognise that the organisation values them. Hence, they will become increasingly dedicated to ensuring that the company objectives are attained. I believe that as an ethical leader, I will have prevented the company suffering from a bad reputation and retained existing customers that may have otherwise moved to the competitors because of the belief that the company is biased and ethically inconsiderate to the needs of gender equality. 

           This notion would help build an ethical organisation because it will demonstrate that the employees are respected by valuing their treatment and opinions equally. For instance, I believe that the company can be ethical by showing respect to the way employees are paid and trying to find a way to equalise their wages and assessing their needs and feedback on the same. The company stands to benefit from this because the more valued the employees feel, the higher they perform for the organisation. This kind of relationship is mutually beneficial because both parties are able to gain an advantage. Feng et al. (2018) state that an ethical business cares about all stakeholders, including customers, the public, and the employees. Therefore, each decision that is made by the business relies on the impact it may have on the stakeholders or the business environment.

           Unethical mannerisms have a significant consequence on organisations because they damage reputations, harm employee morale, increase regulatory costs, and affects the society’s trust in the business (Engelbrecht et al., 2017). Compliance programs usually have a legalistic approach with regards to ethics which concentrates in the accountability of an individual (Lin and Liu, 2017). Thus, forming an ethical culture within an organisation requires perceiving ethics as a design problem rather than just a belief problem. I believe that the company needs to ensure that its practices and strategies are anchored to clearly stated principles and can be used widely within the firm. For instance, strategies on how to implement gender pay equity can be formulated. Leaders can use them as a guide when formulating a new initiative or strategy addressing employees; this will reinforce a wider ethical system within the organisation.

           As a manager, I know that I can empower an ethical culture by creating contexts that maintain ethical principles, such as promoting the need to implement gender pay equality. For example, at Johnson & Johnson UK, each executive is evaluated to meet the company’s perception of good ethical behaviour at the workplace; thus, it shows the organisation’s commitment to employees, customers, stakeholders, and communities. This usually helps nurture a commitment to the organisation and assists in determining actions which are considered to be unethical and reinforce an environment that promotes uncompromising integrity as a relevant norm.

References

Asif, M., Qing, M., Hwang, J. and Shi, H., 2019. Ethical leadership, affective commitment, work engagement, and creativity: Testing a multiple mediation approach. Sustainability, 11(16), p.4489.

Engelbrecht, A.S., Heine, G. and Mahembe, B., 2017. Integrity, ethical leadership, trust and work engagement. Leadership & Organisation Development Journal.

Feng, J., Zhang, Y., Liu, X., Zhang, L. and Han, X., 2018. Just the right amount of ethics inspires creativity: A cross-level investigation of ethical leadership, intrinsic motivation, and employee creativity. Journal of Business Ethics, 153(3), pp.645-658.

Feng, T., Wang, D., Lawton, A. and Luo, B.N., 2019. Customer orientation and firm performance: The joint moderating effects of ethical leadership and competitive intensity. Journal of Business Research, 100, pp.111-121.

Lin, C.P. and Liu, M.L., 2017. Examining the effects of corporate social responsibility and ethical leadership on turnover intention. Personnel Review. 46(3), 526-550.

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