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The gender pay gap remains a persistent challenge in workplaces worldwide. Salary benchmarking—a process of comparing internal pay structures against external market rates—offers a powerful tool to help organisations address both the gender pay gap and gender pay disparity. By providing objective data on compensation, salary benchmarking enables businesses to identify inconsistencies, implement fair pay practices, and work towards greater pay equality.
Before tackling the issue, it is crucial to distinguish between the gender pay gap and gender pay disparity. The gender pay gap refers to the difference in average earnings between men and women across an organisation or industry, often influenced by factors such as job level representation and career progression. Gender pay disparity, on the other hand, focuses on differences in pay between men and women performing the same or similar roles with comparable experience and qualifications. Addressing both requires different but complementary strategies, including pay transparency, structured career progression, and salary benchmarking.
Despite significant efforts to reduce gender pay inequality, research shows that the issue remains widespread. According to the Office for National Statistics (ONS), the gender pay gap in the UK decreased to 7.0% (from 7.5% one year earlier) for full-time employees.
Key factors contributing to this gap include:
Addressing these structural issues requires a multi-faceted approach, and salary benchmarking is a vital component of the solution.
The UK clothing retailer Next faced legal action when an employment tribunal found that the company had discriminated against its predominantly female store staff by paying them less than mostly male warehouse workers. Independent assessors determined that the roles were equivalent in terms of skills and responsibilities. This ruling, which could cost Next £30 million in back pay, underscores the importance of evaluating and benchmarking salaries to ensure fairness across different roles within an organisation.
Pfizer has implemented a comprehensive strategy to address its gender pay gap, focusing on regular salary analyses and support for women's progression into leadership roles. Between 2019 and 2020, Pfizer reduced its gender pay gap from 15.9% to 10.2%, demonstrating the effectiveness of targeted interventions.
Salary benchmarking provides a clear, data-driven foundation for fair and equitable compensation decisions. Here’s how it can help tackle both the gender pay gap and gender pay disparity:
By comparing internal salaries to external market data, businesses can pinpoint inconsistencies in pay across gender lines. Regular benchmarking ensures that salaries remain competitive and aligned with industry standards, reducing the risk of unconscious bias affecting pay decisions.
Publishing salary bands and benchmarking data helps foster a culture of pay transparency. When employees understand how pay is determined, trust in the organisation increases, and pay disparities become easier to address.
Implementing structured pay frameworks based on benchmarking data reduces the risk of subjective decision-making in salary negotiations. Clear guidelines help ensure that compensation decisions are made fairly and consistently.
Regular pay audits using salary benchmarking data allow businesses to assess whether gender pay disparities exist within specific roles or departments. This process enables proactive adjustments before inequities become entrenched.
Offering market-aligned salaries attracts top talent and fosters employee satisfaction. When employees perceive pay structures as fair, retention rates improve, and organisations benefit from a more diverse and motivated workforce.
While salary benchmarking is typically conducted at an organisational level, line managers play a crucial role in ensuring fair pay practices within their teams. Here are key actions managers can take:
Addressing the gender pay gap requires both organisational and individual action. At a macro level, businesses must commit to transparent pay structures, regular salary benchmarking, and proactive diversity initiatives. At a micro level, managers must ensure that pay decisions are fair, performance evaluations are unbiased, and employees are given equal opportunities for progression.
At Goodman Masson, we understand the importance of salary benchmarking in driving fair pay practices. Our Salary Guide 2025 provides comprehensive salary insights across a range of industries, helping businesses make informed compensation decisions. While we do not segment salaries by gender, our guide offers reliable average salary ranges, ensuring that businesses can set equitable pay structures that support gender pay equality.
Download the Goodman Masson Salary Guide 2025 to take a proactive step towards fairer pay in your organisation.
