Closing the pay gap: From perception to action in boardrooms

Closing the gender pay gap isn’t just about fairness; it’s about building a talent pipeline that strengthens decision-making, performance and trust. The Ministry for Women’s new Gender Pay Gap Perceptions and Practices report shows some organisations are moving decisively, while others are still at the starting line. For directors, that split represents both a governance risk and a practical opportunity to lead.

The headline is momentum with gaps. Forty-three per cent of organisations have calculated their gender pay gap in the past year, a further 17% have done so in the past and 16% intend to do so within the next 12 months; 24% have not engaged and don’t intend to. This is the kind of baseline visibility boards should expect to see and track.

Knowledge is building, but uneven. Overall, 69% of organisations say they know how to calculate the gender pay gap or know where to find the methodology, and among those intending to calculate in the next 12 months, only 30% are confident they know where to find the calculations.

By sector, the public sector reports higher knowledge (83%) than private (64%) and not-for-profit (40%); by size, very small organisations (up to 50 staff) are least confident.

Most organisations already hold useful data. Ninety-five per cent collect at least one type of demographic data; 90% collect gender, 56% ethnicity and 34% disability. Of those that collect gender data, 67% use it for pay-gap analysis. That means many boards can get information in front of them by asking management to use what’s already in-house.

Monitoring is the weak spot. Only 40% of organisations monitor the effectiveness of their pay-gap strategy in at least one way, such as regular pay audits (24%), benchmarking against peers (20%), tracking a decreasing gap over time (17%) or using external assessments (5%). This is a clear governance ask: require a simple, repeatable monitoring plan and insist on trend data, not one-off snapshots.

The blockers are familiar and solvable with board leadership. Among organisations that haven’t recently analysed their gap, the most-cited reasons are that it is not a priority (39%), a belief there is no gap (37%), lack of resource (26%), a view any gap would be explainable (25%) and small headcount (24%). Directors can tackle each of these: set the priority, test assumptions with evidence, fund the work proportionately and right-size the method for smaller workforces.

Progress also varies by sector and size. Public sector organisations are furthest along, with 81% “already on their way”, reflecting mandates and scale. And of the organisations that don’t plan to assess their gap, 95% are small or very small (under 500 employees). Those are precisely the contexts where board sponsorship and pragmatic scoping make the difference between intention and action.

Awareness and use of available tools can be lifted quickly. Just under half of respondents (49%) know about the Ministry for Women’s gender pay gap toolkit, and only 13% have used it – a straightforward opportunity for directors to ask management to adopt recognised guidance.

According to the survey, most organisations also lack a formal governance home for the work: 83% do not have a committee or working group dedicated to gender pay gap outcomes (12% do; 4% plan to).

How we understand the problem shapes the action we take and how ambitious we are in tackling it. If we treat the pay gap as a narrow payroll exercise, we will miss the cultural and structural barriers that keep women out of higher-paid roles. Directors set the tone here – aligning expectations, resources and accountability.

The public sector’s governance pipeline shows what consistent attention can achieve. As of 31 December 2024, women held 52.1% of Cabinet-appointed public sector board and committee roles – down from 53.9% in 2023, but still the fifth consecutive year at or above parity. Women also hold 44.5% of chair roles. The lesson for boards is straightforward: what gets measured, resourced and reviewed improves.

What should directors do now?

• • Ask management for a timetable to calculate or refresh your organisation’s gender pay gap this year and to break down the drivers by level and function
  • Require an action plan with milestones and a monitoring cadence you’ll see quarterly
  • Link relevant equity outcomes to executive KPIs so they drive behaviour
  • Agree the communication approach, internal and external, that builds trust without over-promising

The tools exist, the data exists and many organisations have already started – the board’s role is to convert that into disciplined execution. Directors should ensure that momentum is sustained by embedding pay equity into strategic priorities, not leaving it as a one-off HR initiative.

A consistent, transparent approach now will not only close gaps faster but also strengthen organisational culture, reputation and long-term performance.