People & Human Resources

Should SMEs be a bigger part of the gender equality conversation? These founders think so

Matthew Elmas /

Adore Beauty Kate Morris

Adore Beauty founder Kate Morris. Source: Supplied.

The gender pay gap has experienced its biggest single-year drop on record, but men are still being paid 21.3% more, on average, than women.

That’s according to annual figures released by the Workplace Gender Equality Agency (WGEA) today, which show progress on a number of issues, from an increase in the number of women in management roles to a proliferation of equality policies.

The gender pay gap narrowed by 1.1% in 2017-18, reducing the difference between average full-time pay for men and women to $25,717 each year.

There’s still plenty of work to be done though. The findings show a stagnation in access to parental leave, a decline in the prevalence of carer’s leave and the persistence of glass ceilings as a barrier for chief executive and board advancement.

There’s another issue as well. Under the Workplace Gender Equality Act only non-public sector employers with 100 or more workers are required to report annually against key equality indicators, including pay gaps.

Small to medium businesses, which account for about 40% of Australia’s workforce, are missing from the reporting regime, raising concern not enough is being done to understand the state of workplace gender equality in the small end of town.

Julie Mathers, founder of online retailer Flora & Fauna, which last month made the AFR’s fast starters list, says the reporting regime should include SMEs, either in a blended report or as part of a separate inquiry.

“When you’re looking at companies of 100+ employees you’re missing out on a huge portion of businesses,” Mathers tells SmartCompany

Adore Beauty founder Kate Morris agrees, saying while big corporates have the resources to do the heavy lifting on workplace equality, SMEs have a role to play in moving the needle.

“As a business owner, it would be of value to me to know how my business measures up to others on gender equality KPIs, and where we could improve,” she tells SmartCompany.

Sharen Page, coordinator of Security4Women, a national alliance funded by the federal government, has worked with the WGEA on creating resources for SMEs and believes more should be done.

“SMEs have a bigger role to play in the conversation because they are the employers of the majority of women,” she tells SmartCompany.

First reported by SMH earlier this week, WGEA has been given $8 million in extra funding to improve reporting on workplace gender equality.

It is currently not known what the funding will be used for, but Page says she hopes some of it will be dedicated to evaluating SMEs.

The WGEA did not respond to requests for comment.

Not everyone wants the regime extended though. Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong believes SMEs have an important role to play in moving the needle on gender equality, but is worried a reporting requirement would incur additional red tape.

Best practice in workplace gender equality

The WGEA has produced some resources to help small- and medium-sized businesses implement best practice policies, but data on the state of equality in the SME sector is scarce.

A 2012 study conducted by Edith Cowan University, focusing primarily on firms in Western Australia, found there was a lack of knowledge about gender pay equity among SMEs.

A report earlier this year released by accounting software firm Xero identified a 14% rise in median wages for women, more than four times the growth rate for men.

Mathers says there could be lessons SMEs could teach larger companies.

“Women struggle to get paid the same amount in bigger corporations and they struggle to get those chief executive roles.

“A lot of women I know choose to go, ‘you know what, I’m out of here, I’m going to set up my own business’ … so there’s a lot of SMEs with women in senior positions,” she says.

The WGEA requests information on gender composition, remuneration, flexible working policies, sex-based harassment and discrimination as well as consultation from larger employers.

But many smaller companies face a different set of considerations, including the financial viability of things such as paid parental leave and a lack of human resource support.

Mathers says there are advantages too, such as an ability to be nimble and change quickly.

“That’s the reality of small business life, you develop policies as you go.”

The WGEA advises SMEs to focus on understanding the main issues that can potentially affect remuneration outcomes for women, including unintended biases in hiring, promotion and pay decisions.

It has developed a three-step process for businesses, including advice on how to conduct payroll analysis and developing an action plan to rectify pay gaps.

In the case of Adore Beauty, Morris believes businesses which are in a financial position to provide parental and domestic violence leave should do so.

Adore Beauty has a paid parental leave policy for men and women for up to three months and has an expanded domestic and family violence leave policy that was implemented last month.

Mathers’ advice for business owners is to adopt a case-by-case approach to flexible working arrangements.

“As a small business you can be flexible,” Mathers says. “There’s no blanket approach for everyone and everyone’s needs are slightly different.”

“What we’ve found quite a bit of is people say they don’t want to stop working completely, they just want to be more flexible, so they ask if they can work from home one or two days a week.”

Flora & Fauna also prioritises promoting from within, opting to develop its staff for future leadership roles rather than looking outside the business or overseas as the first point of call.

Mathers says this fosters an environment where women in her business can progress their careers and move into leadership positions over time.

NOW READ: “Anyone who can help should help”: Why Adore Beauty is doubling domestic violence leave

NOW READ: Why Adore Beauty founder Kate Morris has created a Women in Tech scholarship to break down diversity barriers: “It’s not about ‘leaning in’ more”

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Matthew Elmas

Matthew is the news editor at SmartCompany.

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