Gender pay gap reporting shines an important light on a very real problem; one that needs to be assessed, highlighted and addressed.  Yet, in the short term, it’s a colossal undertaking for most large firms, and risks significant embarrassment and exposure. Just ask the BBC! We take a look at what companies can do to address the scale of the problem.

When the moral compass of a trusted British institution goes awry, public outrage knows no limits.  And so it was that, last week, the BBC faced a barrage of criticism when it publicly released its report on gender pay. The findings were eye watering, making the term ‘gender pay gap’ almost laughable.  More like ‘gender pay chasm’! But, in fact, the problem runs far deeper into the fabric of British industry than this one, high profile example.  The real story is about the more typical, run of the mill organisations, in which employees on far less inflated pay packages are suffering the same degree of inequality. It’s wrong, and it’s an institutional problem across all industries, in all parts of the country, hence the need to lift the lid on a ‘Pandora’s Box’ of issues.

What Is Gender Pay Reporting?

Let’s take a moment to look at what gender pay gap reporting is, and what it is not. Gender pay gap reporting shows the difference in average pay within a given organisation, between all men and all women in the workforce. There are no laws (at least at present) determining what is acceptable or unacceptable. And, believe it or not, despite all the stipulations regarding what data should be reported, by whom, where it should be published, and by when, there is one major flaw. There is no clear comeback for companies who are obliged to file reports but fail to do so. (The European Court of Human Rights website simply states that it will ‘take steps to address’ any company failing to comply). Now, let’s compare this to equal pay reporting, which shows the difference between men and women who carry out the same (or similar) work, or work of equal value within the same organisation. Paying one person less than the other, in these circumstances, is unlawful if it is on the basis of their gender.

Gender pay reporting is an investigative process. It identifies and quantifies the problem at large, but it is not, in itself, a solution. Like any good investigation, it starts with establishing the facts, gathering evidence, and presenting the scale of the problem. The solutions at a central / government level will follow later, and it is anybody’s guess what shape these may take. It is early days in a very lengthy process. In the private and voluntary sector alone there are approximately 9,000 businesses required to publish reports by April 2018 (public sector organisations have until May 2018). Given the scale of the task, particularly for large companies, it isn’t surprising that only a small fraction of these have published their findings, as yet.  As, for business leaders, it probably feels like they’re being thrown under a bus marked ‘Statutory Regulation’.  Publishing data that potentially uncovers a massively unfair discrepancy between one half of the working population and the other is a potential employee engagement minefield (although, arguably, in the long run, so is burying one’s head in the sand about it).  But, as in any circumstance, problems are far more easily faced when armed with an arsenal of potential solutions – some of these solutions will be driven by government recommendations and policy, but sensible employers would be minded to take some ownership for change more immediately than that.

The Gender Pay Gap And UK Industry

Even once the reports are all in, UK industry will have barely shuffled over the start line of the gender pay gap marathon. Deloitte research shows that, unless immediate action is taken, the gender pay gap will remain until 2069. There is no overnight solution, no quick fix – if the chasm is as wide as early reports suggest, then this will be a costly and time consuming problem to solve. But, solve it, we must. (You would think, in these enlightened times, that this would be a matter for unanimous agreement, by the way. Sadly not, according to NGA Human Resources, whose research shows that a third of bosses don’t believe the pay gap is a business issue. One can only assume that they are mostly men!). McKinsey estimates that bridging the UK gender gap in work could potentially create an extra £150 billion on top of ‘business as usual’ GDP forecasts. So, there you have it – the economic argument, as well as the moral one.

Closing The Gender Pay Gap – What Next?

What will happen, in the wider world of British industry, after April 2018 is in the hands of the European Court of Human Rights (ECHR). Once all businesses required to comply with reporting stipulations (those with more than 250 employees) – and of course, any smaller businesses who elect to voluntarily participate in reporting – have filed and published their data, the ECHR will compile a report for the government. This will highlight what they surmise to be the main causes of the problem, along with their suggested actions and recommendations on how they can help close the gender pay gap across Britain. A gap that was already substantial (18.1%, according to ECHR research) in 2016 even in the absence of any compulsory disclosure.

The gender pay gap can’t be tackled in a bubble. It is everyone’s problem. The higher powers of government are committed to resolving it, and the findings of this first round of annual reporting will very much steer their course in that regard. Their overarching role needs to be in addressing the wider societal framework, such that it supports working women and enables fathers to do their share. But it is down to business leaders to get their own house in order, too, and the time is now.

Reporting is the first step (for some it is a compulsory one, but frankly, the moral obligation to do so remains as compelling whether you have ten employees or 250 plus), but remedial action need not be contingent upon an ECHR report and government recommendations. So, what can responsible business leaders do, right here and now, to bridge the gap between today’s gender pay divide and the future parity that the great British workplace strives towards?

  • Identify the scale of the problem. If you haven’t started compiling data and reporting, then get cracking. You either have a statutory obligation to do it (in which case, tick tock!) or a moral obligation. If your company is small to medium sized then, whilst it is not compulsory for your business, neither will it be a behemoth task. What it will be, however, is enlightening, instructive, and instrumental in sending the right message to your workforce about your commitment to gender equality.
  • Turn data into insight. Knowledge is power, and compiling and reporting on gender pay will highlight the symptom (pay disparity) and point you towards the cause of it. Having a gender pay gap is not unlawful, but it hardly serves to engage those on the wrong side of the crevasse. It may be avoidable if you can identify the root causes and put in place measures to prevent it.
  • Identify key actions. Gender pay gaps can arise for many reasons, often unique to your company, or endemic across your industry. You need to identify what you can fix from within the organisation and waste no time in doing so. The list is far from exhaustive, but a few suggestions are:
    1. Positive action – there may be positive action you can and should be taking. For example, if women are typically clustering at the lower paid levels of the organisation, you may elect to actively encourage more women with the right skills to apply for higher paid senior roles.
    2. Corporate culture – address any wider corporate culture issues around diversity and inclusion. Does your business need to address any major attitudinal shifts in terms of how women are perceived and valued? Do you even have a handle on how fully engaged women feel within your workplace and whether that is down to pay alone, or a more fundamental sense of being undervalued? Are certain roles seen (and therefore defined – however subtly) as ‘masculine’ or ‘feminine’?
    3. Policies and practices – take a close look at your policies and practices, and specifically whether they put a glass ceiling at head height for women. What could you do different to enable women to progress with equal opportunity to their male counterparts? It may be that you should open your mind to more flexible working opportunities, subsidise childcare, offer enhanced paternity rights, or simply address and review your succession planning such that it recognises and values women as equally as men. And once you’ve done this, communicate it. It should be loud and clear to women that your organisation encourages them to apply for opportunities, enables them to combine a progressive career with parenting, and actively engages them at all levels and all pay grades within their capability and reach. This needs to be the rule and the expected norm, not the exception. Diversity is having the right policies. Inclusion is making it known they’re openly and actively practised and embedded into the culture.
    4. Pay reviews and financial planning – the blindingly obvious solution is to address pay rates. If women are typically clustering at the lower paid levels within your organisation, then some form of affordable strategy of raising pay over a defined time would help to address any average imbalance.

So here’s to gender pay gap reporting. It’s the start of a great conversation, and hopefully the beginning of a slow but delayed journey towards improvement.   And whilst a certain degree of hyperbole and vilification is inevitable in the wake of every BBC-style disclosure, here’s hoping that the main thrust of our attention is on looking forwards not backwards, towards proactive solutions to building a future in which there is no need for the term ‘gender pay’ in our lexicon.

If you’d like to start a conversation about how diversity and inclusion impacts engagement in your organisation, would love to hear from you.