Gender Pay Gap and beyond
Focus should be on long-term improvements
Analysis of the second annual submission of Gender Pay Gap data by Pinsent Masons showed that most businesses had seen only a marginal shift in their GPG figures since last year.
This is not surprising, as the GPG regulations were never intended to produce a quick fix. They are designed to promote sustained and positive change over the long term. For this reason, organisations should not be fixating over their headline figures but should be focusing on implementing long-term targeted action plans, which in some cases could lead to higher GPGs in the short term.
Changes seen from last year and going beyond the 'tick box' compliance
Our analysis has found that 48% of firms lowered their pay gap compared to last year, with 7% reporting no change and 45% reporting an increase in the gap.
Alongside publishing the raw GPG data, employers have been encouraged to publish a narrative to contextualise their data. For this reason, it has been common for some companies to choose to disclose extra information that goes beyond the requirements of the regulations.
In the latest reporting cycle a number of companies chose to voluntarily report their ethnicity pay gaps, whilst some went a step further to report their sexual orientation and disability pay gaps.
Pinsent Masons, the Bank of England, Deloitte, ITN and KPMG are among the employers that published their ethnicity pay gap. Draft regulations in relation to ethnicity pay gap reporting are expected later this year, following a consultation in late 2018. Companies need to be constantly challenging themselves to see what’s on the horizon and how they can keep pace of change.
Other examples of proactive reporting include employers breaking down the gender make up of their organisation overall, including at board level, describing the actions they are doing to reduce their pay gap, admitting to the structural issues that have led to a gender imbalance and publicly setting targets for female representation.
Many of the big accountancy firms and law firms have, like Pinsent Masons, published their partner pay gaps and pay gaps including partner pay. The move follows concerns expressed by a number of individuals in business and government that, in following government guidelines, which prohibit the inclusion of partner data in GPG reporting, partnerships have distorted the true nature of their gender pay gap.
Some employers also chose to confirm that they have undertaken an equal pay review and that they are satisfied that the gap is not indicative of an equal pay issue. This helps to educate the workforce and discourage equal pay challenges.
Focusing on the long-term
The data reported this year masks some good work being carried out to combat the GPG because, in some cases, the GPG which employers report will grow in the short-term as a result of efforts to reduce the gap in the longer term.
We have seen that some companies which have introduced initiatives to encourage more women into entry-level roles have reported higher gaps this year because these initiatives have resulted in them having more female employees in lower-paid roles during this reporting cycle. However, these companies now benefit from a strong pipeline of female talent; women who will hopefully progress through the ranks and become future leaders.
Companies need to understand the reasons for the GPG data and then focus on short, medium, and long-term actions to invest in and develop their current and future talent pipelines. The benefits and rewards of a balanced workforce at the individual, team, and organisational levels have been well proven, and the increases in productivity and profitability are there for the taking, especially for those companies that are looking to deliver long term cultural change as a way of closing their GPGs.
Companies continued to cite the lack of female representation in more senior positions, as well as historic trends, societal issues and the lack of women in certain sectors or industries as reasons for their GPGs.
Given these deep rooted, underlying challenges, it is clear that closing the GPG altogether is going to take years and many have questioned whether annual reporting will actually help close the gap or will simply become a box-ticking exercise. Given that the reporting requirement has attracted such significant media interest and interest from stakeholders both from within and outside organisations, it is hoped that it will be the former.
GPG reporting will only truly be effective if employers are required to explain the underlying reasons for their gaps and set out targeted plans to address them.