Gender pay gap figures make harrowing reading, but when it comes to the reward landscape the problem is far worse, argues Sara Benwell

The campaign to highlight gender pay gaps has been gathering pace for over a decade, but now that new rules have come into force requiring larger companies to publish statistics on their remuneration policies, the issue has been thrown into stark relief.

It’s made harrowing reading. A whole host of companies from airlines and high street stores to consultancies and law firms have been reporting gaps well into double figures. Fashion store Phase Eight reported a pay gap of a whopping 64.8%, Easyjet has a gap of 51.7%, and the Deloitte pay gap jumped to 43% (once equity partners were added into the mix).

The highest gender pay gap so far is 88%, reported by textiles group Rectella.

Analysis from the Financial Times, which looks at government data alongside the information that companies have reported so far, boils the issue down nicely (if depressingly). 89% of women work for a company where the men are paid more, with over half facing a gap of 9% or more. Only 11% work for a company that pays women equally or better.

This is plainly bad. It’s hard to see how a world where women are almost guaranteed to be paid less than men can be a fair one. And the knock-on effects on everything from recruitment to reputation are only just beginning to come clear.

There are, of course, reasons behind the pay gap. For almost all organisations that have reported, the problem is a dearth of women in senior or middle management roles.

And while many companies have rightly come out with sensible plans to address this issue, an equal number seem to be treating pay gap reporting as a compliance issue, acknowledging that there is a gap, without nearly enough focus on how to address it.

But those companies who fail to tackle the issue will pay the price over time. Companies have survived this round of reporting – mainly because the situation is so bad across the board, that it’s hard to single individual organisations out.

In the years to come, those firms that fail to take steps to address pay gaps will find themselves rightly facing intense scrutiny. We’re accepting (in a slightly horrified way) that gaps exist for the time being, but there is an expectation that everyone will work now to bridge the gaps.

And as much as this is a business management problem, it’s an HR one too. Because it seems clear that some, if not all, of the solutions lie within the HR function. Better recruitment practices, better training and better support for women taking time out (for instance to care for children or elderly relatives) all play a critical role in addressing the root causes of gaps.

The elephant in the room, of course, is that a pay gap – no matter how big – will be exacerbated when you look at reward packages as a whole.

This is partly true in an obvious way. Benefits such as pensions and life assurance are uniformly linked to pay. The more you earn, the more those company contributions are worth, or the bigger lump sum your family gets if you die. In this context, pay gaps look tiny compared to the scale of gaps in remuneration as a whole.

There are less obvious links too. Certain benefits that are only available to people who earn over a threshold or are only available for senior management, for instance. As men are more likely to reach senior roles, benefits that reward longevity or hierarchy are less likely to be available to women.

And that’s without even examining inherent gender biases within reward structures. The adage that men are more likely to get promotions than women because they ask for them is a classic. Would we not – in an ideal world – want a reward system that recognises skill and performance rather than benefitting a group of people who are just more likely to ask?

These are the issues that HR and reward directors should be thinking about now. Is there a way to weaken the link between reward gaps and pay gaps? Have I accounted for biases in the system? Does our programme favour one gender over another?

And those practitioners who are ahead of the curve on this will see reputational and recruitment benefits in the future. After all, the spotlight may be on pay at the moment, but it’s only a matter of time before campaigners wake up to the realisation that the problem is broader than they thought. When that happens, those that are prepared and addressing the problems will fare well. Those that aren’t will be facing yet another reputational crisis that could have been avoided.

We will be discussing how to address and overcome the pensions pay gap at the Pensions Communication Forum in Birmingham on May 9th. To find out more click here

 

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