Mind The Gap: a view from the UK

After a flurry of UK press coverage leading up to the reporting deadline of 4 April 2018, most UK organisations with more than 250 employees have now published their gender pay gap data and the results are online for all to see.

While some organisations may be pleased with their figures, for the vast majority it’s a sombre read. The statistics show that around 8 out of 10 organisations had a gender pay gap in favour of men, with the average mean gap being around 18%.

The high-profile media scrutiny has led to confusion, not least the commonly misunderstood difference between the gender pay gap and equal pay. Gender pay gap reporting examines the mean and median of the hourly rate and bonus payments of every employee in the business. It doesn’t look at comparisons of pay for similar roles (equal pay for equal work). The recent coverage of the ongoing BBC equal pay headaches demonstrate how the two are often confused.

So, given data doesn’t reflect pay for the same work – how useful is it really?

One of the most useful aspects is the requirement to publish gender balances by quartile. By detailing the proportion of men and women at each level of the organisation, there is no hiding from the fact that the upper quartile of the vast majority of organisations is predominantly male. We instinctively knew this, of course, but the reporting requirement puts this in black and white, making it much harder to ignore.

The gender imbalance in the top team is not the only issue the reporting has surfaced, but for many it is the most compelling. In one client I helped with their pay gap calculations, there were 4 people in the executive team (all men) and 350 employees in the organisation overall. Their reported pay gap was over 15%. I calculated that if the executive team had been 2 men and 2 women, the overall pay gap would have been just 3.2%.

I’m not suggesting we sack half the leadership teams, of course. That’s a whole other discussion point! But we certainly need to get better at ensuring that those who progress to senior levels are diverse.

What next?

For UK organisations this year, it very much depends on how proactive they were in year one. The pay snapshot used for analysis is April of each year, so the date for this year’s numbers has already passed. Those who only got to grips with their position late last year will have no opportunity to make a significant difference to their numbers this year. I suspect many organisations will report identical numbers in year two, and will have an awkward PR challenge to address.

Ideally, organisations should analyse their numbers as quickly as possible after the April snapshot, and then set to work on making a difference over the year that follows, even if they choose to publish later in the year.

So what can organisations do to make a difference in year two and beyond?

Successfully addressing the gap will require a far deeper analysis than the pay gap reporting itself, and initiatives that involve much more than a few unconscious bias training sessions.

UK organisations will need to lift the bonnet on their wider pay practices that NZ organisations could adopt now to be ahead of the curve, in particular have hard data on:

• Equal pay – do you have a clear evaluation methodology and pay structure to determine like-for-like pay? Are you confident you could successfully defend an Equal Pay claim?
• Annual pay reviews – are the increases balanced by gender?
• Promotions – what proportion of promotions are awarded to men as opposed to women?
• Ad-hoc pay increases – where increases occur outside the annual pay cycle, what proportion of these are male vs female?
• Movements in and out of the organisation – what proportion of joiners and leavers are male and female? Where you have a 50/50 balanced graduate intake, at what point in the grade structure does the imbalance start to occur?

While it may not be perfect and the devil is inevitably always in the detail, overall Gender Pay Reporting is generating important and difficult conversations in over 10,000 organisations across the UK. Progressive organisations are using the insights gained to drive positive change, and sooner or later will march ahead of those who are sweeping it under the boardroom carpet, by attracting, developing and retaining a far more diverse and talented workforce.