The ongoing issue of gender-based pay inequity remains a significant concern. Even the highest-earning women in the American workforce exemplify how deeply ingrained this problem is.

Our recent research, The Surprising Truth about Gender Pay Equity, reveals that despite persistent efforts women continue to earn, on average, 15% less than their male counterparts.

At the current painfully slow rate of progress, our analysis indicates that women won’t experience a true “Equal Pay Day” until 2048.

While it’s true that the gender pay gap has narrowed — it’s not the 1970s anymore — advancements have been sluggish. Our data shows that the gap was 18% in 2017.

This pace of change is inadequate, particularly for mid- and late-career female managers who have been performing the same roles as their male peers but have been denied equitable pay and benefits for years.

As a result, they may be facing retirement with significantly lower balances in their 401(k) accounts than they rightfully deserve.

Progress has also been inconsistent. From 2017–2018 to 2022–2023, there was no change, and between 2021–2022 the gender pay gap actually widened from 15 to 16%.

However, there is encouraging news: some companies are refusing to wait 24 years to achieve pay equity.

Long-delayed systemic change

Consider the approach taken by German-based enterprise software giant SAP, a multinational leader that positioned pay equity as both a strategic priority and a competitive advantage.

SAP’s leadership recognized that transparent pay equity across its global workforce of 105,000 could distinguish the company in the marketplace.

As a result, today, all SAP employees worldwide have access to the salary range for their job family and location. In 2022, more than 99% of SAP employees were paid fairly for equal work.

SAP’s journey to pay equity centered around a new global compensation framework built on transparency and regular salary adjustments. A key component was the development of specialized HR software that enabled real-time pay analysis, empowering managers to make fairer, data-driven compensation decisions.

The company’s commitment to fair pay didn’t stop at transparency. SAP removed caps on promotional increases, and a dedicated corporate budget funds pay equity adjustments across the organization.

SAP’s focus also extends to broader rewards, including benefits, career growth, and learning opportunities, addressing multiple factors that influence equity. To support this initiative, SAP provided line managers with extensive training and practical tools for implementing pay equity effectively.

The impact of SAP’s efforts has been significant. Their proactive salary adjustment cycle was so effective that only 70% of the designated budget for equity adjustments was needed.

Overall, SAP’s holistic approach to pay equity has led to substantial, measurable improvements, setting a benchmark for other companies aiming to make genuine progress on this front.

The pivotal role of DEI commitments

Tetra Pak, a multinational leader in food packaging and processing, exemplifies how a commitment to diversity, equity, and inclusion (DEI) can drive meaningful change in pay equity.

Integrating DEI into its sustainability goals, Tetra Pak formed global and regional DEI panels to ensure diverse perspectives and voices are represented in decision-making.

This approach, combined with a focus on increasing female representation, has boosted the number of senior leadership roles held by women by 14%.

In tandem with this effort, Tetra Pak has worked diligently to close the gender pay gap.

The company now utilizes a comprehensive DEI dashboard to track its progress, continuously monitoring pay practices to maintain fairness across roles and levels.

This commitment to both gender representation and pay equity is driven by strong top-down leadership and clear accountability structures.

Tetra Pak’s focused initiatives demonstrate how a holistic DEI strategy can lead to substantial improvements in workplace equity, setting a strong example for other firms looking to balance diversity goals with equitable pay practices.

A rising tide of employee demand

Even if an organization has scaled back its DEI initiatives, it still has a responsibility to address systemic barriers to equity.

Meeting this obligation is not only a legal requirement in many regions but also increasingly aligns with societal demand for equity.

Data from the World Economic Forum shows that Gen Z expects fair pay, inclusive policies and transparency.

When these attributes are lacking, they are more likely to leave in search of employers who uphold these values.

Addressing pay inequities and ensuring fair treatment across all demographics is not only about compliance but also about fostering a workplace culture that attracts and retains top talent.

So, organizations need to develop and implement a plan to speed up progress.

Organizations must develop and implement a plan to accelerate progress toward pay equity.

The encouraging news is that CHROs can take several strategic steps to facilitate this change. We can summarize these into key points:

• Integrating pay equity into your people and business strategy can bring substantial benefits, including improved financial performance, increased customer satisfaction, and enhanced talent attraction and retention. By prioritizing fair compensation, organizations not only fulfill legal and compliance obligations but also elevate their brand and culture, appealing to a diverse workforce of the future.
• To ensure meaningful progress, start by actively listening to employees regarding their perceptions of equity, bias, and fairness. Form a cross-functional team that represents various organizational areas to conduct a comprehensive pay equity audit. This audit should gather detailed data on employee compensation, identify pay disparities, and investigate the underlying causes. The insights gained can inform actionable recommendations tailored to your organization’s unique structure and needs.
• By elevating the pay equity conversation beyond mere compliance to emphasize organizational equity, you reinforce your commitment to DEI and demonstrate why these principles matter to your brand. Identify the specific behaviors and mindset shifts necessary for equity initiatives to succeed, and encourage open discussions about pay equity.
• Create safe spaces where employees feel empowered to express DEI-related concerns, and weave equity and inclusion practices into everyday policies and actions. This holistic approach to pay equity fosters a culture of trust and transparency, ultimately driving both employee engagement and business success.

Bottom line: pay equity is essential for business success, especially during periods of labor shortages. Achieving pay equity guarantees legal compliance and enhances company performance, fosters innovation, and strengthens the capacity to attract and retain top talent.

To make meaningful progress, organizations require robust analytics to identify and address pay disparities, strong leadership commitment to champion equity initiatives, and clear, consistent communication to build trust and transparency throughout the organization.

With the right determination and a strategic approach, advancing pay equity is not just a possibility—it is an achievable goal.