Angela Williams, Group People Director at Which? and Chair at, Curo Compensation clarifies the importance for employers to fully understand the causes for their gender pay gap to help bridge the gap
By April 2018, employers with more than 250 people must report their gender pay gap. While the regulations are clear, it is important for employers “to understand any underlying causes for their gender pay gap and take suitable steps to minimise it” – it’s about taking real action. This is not about equal pay (that was addressed in the Equal Pay Act 1970 and more recently the Equality Act 2010).
The reasons for gender pay gaps are complex: from the stereotypical representations of men and women, to the standards in careers advice and guidance available. Some employers still need to address the unsupportive and rigid corporate cultures in place, as well as the lack of well-paid part-time/flexible work.
In some cases women may choose not to progress in the workplace. However, unhelpful assumptions about mothers not wanting or not being in a position to accept promotion, or a lack of diverse senior female role models, mentoring and/or sponsorship, do not help employers address the gender pay gap.
So what are the benefits?
The OECD has estimated that bridging the UK gender gap has the potential to create an extra £150bn in addition to the business-as-usual GDP forecasts in 2025, creating 840,000 additional female employees. Benefits to employers include an enhanced reputation; increasing perception of being ethical and fair; attraction of a wider talent pool; increased productivity, employee engagement and customer satisfaction.
85% of the CEOs surveyed whose companies have a formal D&I strategy said it improved their bottom line. Diverse views make for better decisions and thus drive a high-performance culture. This can be achieved by clear strategy; attraction of diverse talent; in-house D&I champions; networks; training; diverse Boards and a stronger focus on social inclusion where all employees can do their best.
Gender pay gap reporting is the start and expect further change
CEO pay ratio disclosure is likely to become a mandatory annual reporting requirement for UK PLCs within the next 12 months. While the idea is laudable, this area of reporting is not without risk. For example, if reporting applies only to UK employees, companies might inadvertently be incentivised to move low paid jobs overseas. There are also the practicalities: should employee pay be averaged versus current median pay calculations and what kind of pay and remuneration will be measured? While increased boardroom accountability can only be a good thing, will such reporting really enhance trust in business or will it drive top talent from the UK?
Ethnicity pay reporting is also on the agenda.
The Conservative government pledged before the June 2017 election to legislate for employers with more than 50 employees to publish workforce data broken down by race and pay band.
Denise Keating, CEO (ENEI) made the valid point that: “It needs to be made clear that just encouraging data reporting is not sufficient to drive the real change we need to see, but rather a way of highlighting which gaps exist where.”
Reporting is helpful and whether organisations chose to report now or at the deadline is not what will drive a change. What will make a difference is the real commitment that organisations should make across all areas of D&I, including gender pay, and ensure real action is taken at the highest levels in the organisation. Action will benefit organisations positively, enabling them to grow both financially - in productivity, customer and employee engagement and brand confidence - as well as impacting positively the wider economy and the population.
Angela Williams is the Group People Director at Which? The Consumer’s Association. She is also the Chair at compensation management specialist, Curo Compensation