Gender pay equity: Exploring the impact of formal, consistent and transparent human resource management practices and information

• Author: Jill Rubery,Sebastian M. Ugarte
• Published date: 01 January 2021
• DOI: http://doi.org/10.1111/1748-8583.12296
• Date: 01 January 2021

ORIGINAL ARTICLE

Gender pay equity: Exploring the impact of formal,

consistent and transparent human resource

management practices and information

Sebastian M. Ugarte

1

| Jill Rubery

2

1

Faculty of Economics and Business, University of Chile, Santiago, Chile

2

Alliance Manchester Business School, University of Manchester, Manchester, UK

Correspondence

*Sebastian M. Ugarte, Faculty of Economics

and Business, University of Chile, Diagonal

Paraguay 257, Office 1106, Santiago

8330015, Chile.

Email: sugarte@unegocios.cl

Abstract

This article explores the extent to which formalised HR prac-

tices can reduce gender bias in pay setting or whether, following

Acker (2006), gender bias may still be embedded within

formalised HR practices. Detailed investigation of a critical case

study of a Chilean finance organisation with a strong commit-

ment to formalised, consistent and transparent pay practices

based on individuated information, revealed only a small nega-

tive gender effect on pay and no identifiable gender effects in

starting salaries, merit pay or promotion. These findings provide

some support for the proposition that HR practices focused on

job-related performance (Reskin, 2000) and limiting managerial

discretion may facilitate gender pay equity. However, the case

also reveals the limits of these policies. Women scored equally

well on performance but formalised scores on future potential

were higher for men and mattered more. A significant gender

effect emerged in promotion to more senior posts. These m ixed

outcomes suggest that Acker's (2006) proposition still holds.

KEYWORDS

formalisation, gender pay gap, HRM practices, pay practices,

transparency

Received: 29 October 2019 Revised: 7 April 2020 Accepted: 27 April 2020

DOI: 10.1111/1748-8583.12296

242 © 2020 John Wiley & Sons Ltd Hum Resour Manag J. 2021;31:242–258.wileyonlinelibrary.com/journal/hrmj

Practitioner Notes

What is currently known about the subject matter

•Pay and promotion practices that reward job-related performance and limit the scope for managerial

discretion may facilitate gender pay equity (GPE).

•Formalised and integrated pay systems based on transparency help improve GPE.

•Gender bias may still be embedded even in formalised HR practices.

What the paper adds to this

•Despite efforts to limit bias within merit-based criteria, gender bias may be embedded in formalised HR

practices, particularly in assessments of potential.

•Even formalised HR systems provide room for discretionary practices that may reproduce male-

dominated regimes, especially at the top of the hierarchy.

•Transparency of criteria in HRM processes facilitate identification of any decisions inconsistent with

these criteria.

The implications of study findings for practitioners

•When line managers exercise discretion in pay decisions, moderation of these decisions according to a

transparent pay policy improves GPE.

•Managers' accountability on gender equity indicators may reduce gender bias in decision making.

•There is a trade-off between decentralisation and flexibility in pay decision making, and GPE.

•Organisations should validate the gender neutrality of HR measurement tools (e.g., potential) used to

assess performance and shape career opportunities.

1|INTRODUCTION

The spread of mandatory and voluntary company-level reporting on gender pay gaps is increasing interest among

HR practitioners in how HR policies and practices might improve gender equity, thereby mitigating reputational risks.

That workplace HR practices do shape inequalities in employment is well-known (Appelbaum & Schmitt, 2009;

Phillips, 2005; Reskin, 1993) but knowledge on what form of practices might promote gender equality and under

what conditions is more limited. External and internal influences shape and constrain organisations' personnel policy

choices. These include, inter alia, the organisation's regulatory environment (legal and voluntary), the perceived risk

to reputation, their employees' bargaining power, the perceived importance of retaining and motivating staff and the

organisation's capacity to pay.

Whatever the constraints, managers still exercise some strategic choice over their HR practices and the form

and level of rewards. These choices are threefold: first whether to adopt and implement formalised HR procedures

or allow managers more decision-making discretion, either centrally or locally. The second issue is whether to adopt

unified or more segmented HR policies and practices across workforce groups (Lepak & Snell, 1999); segmented HR

systems may reinforce gender inequality if the segments are characterised by male- or female-dominated

UGARTE AND RUBERY 243