Gender equality is becoming more and more significant in the world of deals and transactions. Inclusive companies are known to make better decisions, have access to a wider pool of talent, and their employees feel more engaged. In terms of deals, diverse and inclusive companies are more successful. Therefore, the gender pay gap between men and women can have direct implications for a company's deal value, according to Mischa Borst, partner of the People in Deals practise in PwC NL.
Gender pay disparities remain large
The PwC report Women in Work 2024 (in Dutch) indicates that women still face significant pay disparities compared to their male counterparts. The average gender pay gap in OECD countries increased from 13.2 per cent in 2021 to 13.5 per cent in 2022. Although the pay gap in the Netherlands is still considerably lower than it was in 2000, it now stands at 13.7 per cent.
The female labour force participation rate in the Netherlands is one of the highest at 81.1 per cent. However, the Netherlands scores the lowest in terms of full-time employment. This is an area where Dutch companies can still gain a lot of ground, particularly by implementing a robust strategy for inclusion and diversity.
In almost every HR due diligence we conduct, a gender pay gap comes to light. This check usually occurs in preparation for a transaction or deal. It also becomes apparent that gender inequality is a significant factor in determining the deal value. Inclusive companies are generally more successful. They make better decisions, have access to a broader talent pool, and their employees feel more engaged.
How does better inclusion and diversity affect deal value?
- Increased attraction of (talented) workers
Employees are more drawn to a company where they can be themselves and which has a good policy for inclusion and diversity. If this is not the case, and there is a gender pay gap, it can significantly damage a company's reputation as an employer. Reducing the gender pay gap can therefore significantly improve a company's growth opportunities. - Reduced outflow of (talented) workers
If there is more equal pay between women and men for the same work and contribution to the business, it creates a sense of equality and fairness. This can lead to higher motivation and job satisfaction, resulting in more engaged employees.
Our global 2023 Workforce Hopes and Fears shows that young people are not very loyal to their employers. Nearly half of Generation Z and more than a third of millennials are strongly considering looking for another job in the coming year. Whether or not you receive a salary increase or promotion appears to play a role in this.
Therefore, narrowing the gender pay gap can lead to lower turnover rates and thus lower personnel costs. According to the Society for Human Resource Management, the cost of replacing an employee is estimated at fifty to two hundred percent of the annual salary. Losing ten percent of the workforce per year therefore means an additional five to twenty percent in personnel costs for a company. - Pay gap or opportunity gap?
One of the main reasons management cites for a gender pay gap is the difference in job level between men and women. At first glance, this seems a plausible reason, but it identifies an even worse underlying issue: the opportunity gap.
A company with an opportunity gap shows that it is not able to get the best out of half of its workforce. As a result, women are underrepresented in management and leadership positions, which in turn leads to a lack of role models. A company thus enters a vicious cycle, ultimately destroying value.
Talent is Crucial for Growth
It is clear that bridging the gender pay gap will strengthen the retention and attraction of talent for a company. The mergers and acquisitions market is facing significant changes. In these new conditions, talent becomes even more crucial to achieve growth and stimulate value creation in deal-making.
Regulation will also help to accelerate inclusion & diversity. The Growth Quota and Target Figures Act requires companies to be transparent about their gradual intake quota and gender diversity figures, and the CSDDD will increase the pressure on the inclusion & diversity of your suppliers.
Increasing Deal Value
Therefore, when making a deal, it is important to analyse the gender pay gap and the opportunity costs on turnover and retention, as well as the growth strategy. Doing so can increase the deal value.
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