Pay Gap – How to Calculate and Interpret theDifference in Pay Between Women and Men
The pay gap expresses the percentage difference between women’s and men’s pay. When comparing averages, the difference between the average pay for men and women is divided by the average pay for men and multiplied by 100. When calculated this way, a positive number means that women have a lower average pay.
What Must Be the Same
Select the period, unit, and range of compensation. The average hourly base wage refers to a different concept than the average hourly compensation including bonuses.
What the Breakdown Reveals
In addition to the results for the entire company, take a look at the representation of women and men in roles with different pay levels. Then focus on the differences within groups of comparable work.
How Does the 10% Difference Arise?
The average hourly wage for men is 300 CZK and for women 270 CZK. The calculation (300 − 270) ÷ 300 × 100 yields 10%. This figure describes the difference between the averages in the selected group. It does not, on its own, indicate what caused the difference or how much a specific person earns.
What does a negative result mean?
Based on this calculation, women have a higher average wage than men. If one of the two groups is missing from the sample, the comparison cannot be calculated.
When analyzing the results, it depends on how you define the comparable group. If you also want to take into account position, seniority, and work schedule, look at the adjusted pay gap. A snapshot of compensation shows how this same metric has changed over time.
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Where to start analyzing compensation differences?
Using the SmartFP example, we’ll walk through the process from the overall percentage to the groups and components of compensation where it makes sense to look for explanations.
