Dive Brief:

• While many efforts to address the gender wage gap focus on negotiation training or other methods of encouraging women to advocate for themselves, December research from the National Bureau of Economic Research concluded that "differences are less pronounced when it is clear that something is negotiable and what the bargaining range is" and that "ambiguity amplifies the difference." Ultimately, the working paper asserts, "[t]he strongest and most consistent evidence to date is seen for increased transparency."
• The paper found "fix-the-women" initiatives, such as the "Lean In" approach or negotiation training, to be ineffective and likely to have adverse effects. Researchers said "fix-the-institution" initiatives are more effective although the evidence is mixed for salary history bans and no-negotiation processes. 
• "While wage transparency should not be expected to eliminate all gender differences, the literature points to it as an effective first step organizations and governments can take if they wish to reduce gender differences in labor-market outcomes," the paper concluded.

Dive Insight:

Pay inequality issues across gender and racial lines are seeing increased attention amid the coronavirus pandemic and its disproportionate impact on women and nonwhite individuals. Transparency has been linked to fixing the gender pay gap in multiple previous studies, including one from Payscale in January 2020 and a 2019 study from three researchers at three universities that found that government transparency mandates were effective as well.

For pay transparency to work, it has to fit with the culture of an organization, sources previously told HR Dive. Companies can implement pay transparency in a variety of ways, but at some point employers should conduct an audit of pay and promotion processes and identify any potential points where unconscious bias or discriminatory structures may exist, researchers and attorneys recommended. 

A consultant writing for the Harvard Business Review also highlighted the importance of a pay equity audit and noted the impetus coming from institutional investors, prospective employees and customers for improvement in this area. The piece agrees with a recent Willis Towers Watson study which found that employers are increasingly tying executive compensation to equity measures and that 43% of companies surveyed completed a pay equity analysis.

Pay bands are one such transparent structure that employers may wish to adopt, according to sources that spoke with HR Dive. Employers also can train managers to have more effective conversations with employees around pay equity and expectations, according to a study from WorldatWork and Mercer.