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Mind… there’s still a gap

The introduction of mandatory gender pay reporting, to all UK organisations, was an attempt to bring the issues into the open. The Government’s intention to make organisations more transparent was a good decision. It isn’t that long ago that employees were actively discouraged from discussing their pay with colleagues for fear it would highlight perceived pay differences.
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The introduction of mandatory gender pay reporting, to all UK organisations, was an attempt to bring the issue of visibility and understanding of differences in pay between men and women into the open. Contributor Peter Meyler, Head of Workplace Consultancy – Barnett Waddingham.

The Government’s intention to make organisations more transparent was a good decision. It isn’t that long ago that employees were actively discouraged from discussing their pay with colleagues for fear it would highlight perceived pay differences. Now, we live in an “always on” multimedia world where openness is fast becoming the norm. The Government may have issued clear guidance on the mandatory reporting requirements, but the problem is that in helping to answer one question it has created a series of others.

With mandatory reporting just concentrating on macro level information, very little has been revealed for large, complex and diverse business which operate in multiple locations. The requirement on employers to produce and publish averages, medians and quartiles was clearly defined. However, these are affected by so many other indicators which need to be measured and understood to enable the macro level reporting to have any kind of meaning and value.

The indicators that will show the real value to employers include: The number and proportion of women versus men employed at different job levels and job roles. For example: the spilt identified as high performing and high potential appearing in talent pools and succession plans; recruited externally or promoted internally into managerial positions choosing to leave the organisation for reasons associated with pay; Differences in the hourly pay rate by gender at comparable job levels, roles and locations; Evidence and assurance that performance is being properly assessed, reviewed and reflected as part of the performance management process; Evidence through pay auditing that pay increases are being applied fairly in line with performance and potential; Comparable levels of starting pay for the same job regardless of the gender of the successful candidate.

The number of management roles at all levels that can be worked part-time or as part of a job share. The number of women choosing to return to work after having a child and returning at the same level or responsibility and pay as their male colleagues

The level and type of support and development provided to staff returning from career breaks.

All of these factors help to explain the impact on gender pay and the results will be different for every organisation. They do this by identifying where any gap is narrowest and widest, what the reasons are for this and the action required to reduce the gap. Most importantly, employers will need to consider why it wants to reduce the gap and ensure its actions help to achieve this. This makes it very difficult for an organisation to benchmark its gender pay gap with others on a comparable basis. Without a more detailed understanding it is also more difficult for an organisation to determine whether it has a problem or not.

What do employees think is going on?
Greater transparency needs to extend past gender pay to communicating the full analysis of employees across the organisation and demonstrate that equal pay across job roles actually exists in practice.  Our recent Generation WHY? survey, which looks at the UK working population’s attitudes to financial wellbeing, reinforces the importance of businesses needing to acknowledge the issues and how they intend to respond. Less than a third of respondents said there is a genuine openness and transparency about pay in their organisation. In addition, only 23 percent of UK employees believe that a gender pay gap exists in their organisation overall, compared to 17 percent believe one exists with the people they directly work with.

Younger people, aged 30 and under, appear to have the highest awareness of gender pay and the strongest belief that a gender pay gap exists within the organisation they work for. Employees in the social care and charity sectors have the highest awareness and transparency around pay, 46 percent and 43 percent respectively, compared to just 18 percent for insurance and pensions and 21 percent for environment and agriculture. The actual organisational gender pay gap is perceived to be greatest among survey respondents in insurance & pensions, 49 percent, and media, 45 percent. However, they may be confused between the issues of unequal pay between genders, and those associated with looking at the averages produced by the Government’s Gender Pay Reporting.

Inevitably, and quite rightly, this type of reporting will extend the discussion beyond just being about pay and into discussions about equality of opportunities and treatment. For example, 13 of the FTSE100 CEOs are men called Dave or Steve compared to just seven being women and recent government data found that four times more men than women are in Britain’s highest paid jobs. This data also found a significant gender disparity amongst those earning six-figure incomes, with 681,000 men earning £100,000 or more in 2015-16 compared with 179,000 women.

I am not levelling criticism at the Government because this was something that needed to have a light shone on it, but their mandated reporting requirements could have gone further. The reality is that employers shouldn’t have to wait for the Government to mandate action which forces them to respond. Employers should already provide governance and assurance that their employment policies are “fit for purpose” and being applied fairly and effectively.

Gender is just one demographic dimension of the workforce. What is next?
Despite the fact that Brexit means we will be leaving the European Union, the biggest demographic change in the UK going forward will be in ethnicity. By the next General Election in 2022, the White British demographic, aged 16-64, will for the first time make up less than three quarters of the UK population, with ethnic minorities making up a significantly increased 16.3 percent. Attracting ethnic minority talent will become a key battleground for UK employers. It would not be a surprising to see an increased push on employment reporting for this group, increasing their management representation in UK business and pay reporting by ethnicity as well as by gender. However, there is another element of diversity that all employers should be interested in as the value for any employer extends into inclusivity. People should be themselves at work and differences in background, belief values, knowledge, skills and ways of working embraced, to avoid “Group Think” and challenge and strive to achieve the best solution.

Understanding your gender pay gap is a good starting point for employers. However, using HR metrics and other employment data you have at your disposal is key to really understanding the employment journey. It could also improve your ability to attract, develop and retain top talent, and the health and the strength of your employment model and value proposition. For your employees to be a key differentiator and competitive advantage, you have to stand out from your competitors. Our focus at Barnett Waddingham is to create healthy employment and long term sustainable business success for clients.


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