Compversation #32 - Can Pay Transparency Really Close the Gap?

Even as someone who works with numbers every day, I’m still sometimes surprised by what they reveal. A few months ago, we published our pay transparency study with YouGov (link in French). And some of the findings really stopped me in my tracks. Let me explain. 

The Pay Transparency Directive was designed, first and foremost, to eliminate unjustified pay gaps between women and men. That broader idea of “fairness” is also what led me to found Figures. 

Action or reaction?

I’ve held the same fundamental belief since the start of my career: pay equity requires employees to be proactive, not reactive. But that’s rarely how companies operate. In reality, the highest starting salary goes to the person who fights the hardest, the biggest raise to the employee who shouts the loudest, and the counter-offer to the one who threatens to leave. 

When companies work this way, they send a clear message to their employees: negotiation gets rewarded. Unless they genuinely want to treat this as a skill worth rewarding (maybe in sales, but even then…), it’s hard to ignore the effect this has on the company culture and employer brand. 

The negotiation gap

This reactive approach can create pockets of inequity and unfairness within an organisation. Study after study has shown that negotiation tends to benefit men more than women. This isn’t just because they’re less likely to negotiate, but also because they are judged far more harshly when they do. 

The “negotiation gap” is not so much about who negotiates, but how negotiation is perceived socially for different groups. Women who do fight for bigger salaries can face what researchers call a “self-advocacy penalty” — they’re seen as less cooperative or more aggressive, and may actually be less likely to be rewarded. 

That’s why, if you asked me for the one thing I’d change about compensation, it would be to remove negotiation from the process altogether. This might sound odd coming from a former compensation leader, but personally, I’ve always hated it. In fact, I’ve always advised candidates to turn the question around and ask the company exactly what they’re doing to ensure their pay is fair. 

Show us the numbers!

But back to our survey. These were the figures that stood out to me: 

• 26% of women are aware of the EU Pay Transparency Directive, compared to 38% of men 
• 40% of women plan to use their right to information, compared to 55% of men
• 65% of women discuss their pay, compared to 74% of men 
• 59% of women have a general sense of what their peers earn, versus 70% of men

Translation: men are more likely to talk about pay, understand their future rights, use their right to information, and then challenge the outcome if they feel they have been treated unfairly.

Virgile, we’ve got a problem

For employers, the best way to navigate the shift towards pay transparency is to put in place fair, structured and objective processes, allowing them to address pay equity proactively. 

Unfortunately, the situation is urgent, even with implementation delayed in some countries. But many employers are still underprepared, and are likely to continue taking a reactive approach. And that’s without talking about the organisations that see pay transparency only as a box-ticking exercise. 

If companies simply wait for the issue to come to them, they risk focusing only on the cases that make the most noise (in other words, men) which is exactly the opposite of the goal of the new law!

The Directive’s entire purpose is to tackle the adjusted gender pay gap that has stubbornly persisted despite decades of effort. But if too many companies remain reactive instead of proactive, it could miss its mark entirely.

A pay gap of 5% might not sound like much, but it could amount to tens of thousands of euros over the course of a career — even more once you take into account lost pension contributions, entitlements and investment growth.

In principle, everyone agrees that equal work should mean equal pay. Companies should therefore aim for more than simple compliance with the new rules. They should seize this moment and tackle the challenge of fair pay head-on. Otherwise, they may end up reproducing the very inequalities these changes are meant to address.

To continue the conversation

Read to keep the discussion alive: 

The Fix: Overcome the Invisible Barriers That Are Holding Women Back at Work — Michelle P. King

A non-fiction book published in 2020. It explores the systemic barriers women face in the workplace and proposes an approach focused on organisational change, rather than individual adaptation. It contributes to the contemporary debate on gender equality at work.