Mind the gender pay gap

The issue of a UK gender pay gap has been under the microscope recently, with reporting from the public sector due by March 30, and private sector companies with more than 250 employees required to report their gender pay gap – including bonuses – by April 4.

While viewers may have been left shocked when the BBC revealed the differences in some of its own employees’ salaries, the corporation isn’t shying away from the issue now, headlining the looming deadlines and discussing the reasons why some may be delaying publication. According to the BBC report, by March 20 only a third of those who need to report had done so, and the Equality and Human Rights Commission (EHRC) says it will be “fully enforcing” the pay gap legislation and writing to companies that miss the deadline.

By holding back on reporting, companies may hope that their data will get buried in a mass of last minute returns. The Guardian quotes a gender pay gap expert as saying: “They are worried that senior women might just leave and it will be more difficult to recruit women. There is this ‘hide in the herd’ mentality because they know the media is all over it.”

All of which begs the question – if these companies value their female talent so highly, then why is there a gender pay gap in the first place?

It’s not about equal pay – it’s about equality

These new reporting standards do not relate to equal pay – legislation is already in place through the Equality Act 2010 to ensure people are paid the same amount for doing the same job. A gender pay gap is more indicative of wider issues for employers such as offering equality of opportunity and understanding the benefits of diversity in a workforce and the importance of breaking down gender bias.

Gender pay gaps can develop for a number of reasons according to the EHRC, including disproportionate numbers of men employed in the highest paying sectors, the negative effect of taking time out to look after family, and unconscious stereotyping, with assumptions about women either not wanting or not being in a position to accept a promotion, particularly where they have caring responsibilities. Women make up 47 per cent of the workforce, but only 35 per cent of managers, directors and senior officials.

ACAS (the UK’s independent advisory, conciliation and arbitration service) says that as part of the reporting, employers have the opportunity to provide a narrative explaining the reasons for their results and giving details about actions they are taking to reduce or eliminate the gender pay gap. They hope that “while employers may already be taking steps to improve gender equality and reduce or eliminate their gender pay gap, this process will support and encourage action.”

The reporting of a gender pay gap may seem to some companies to be a potential risk to reputation and staff relations, but as Karen Gill, co-founder of Everywoman told the Guardian, it could also be an exciting development. “I think the data has made a lot of leadership teams realise they do have an issue, and what is really exciting is that they are now able to pinpoint exactly where in their business they have to focus”, said Gill.

The risks of a gender pay gap

According to Personnel Today, a new survey from public relations firm Golin found that just over three-quarters of professionals agreed that organisations should be named and shamed for their gender pay gap and 77 per cent felt that companies were likely to lose staff once the pay data was published.

More than a third said that the issue was more toxic for companies than corporate tax avoidance and, perhaps most seriously, 39 per cent of female respondents said they would consider leaving if their company reported a significant pay gap.

Sam Smethers, chief executive of equality campaign group the Fawcett Society, told Personnel Today: “Those [companies] who make the greatest progress will develop an evidence-based action plan and start to make meaningful changes – from flexible working by default to supporting fathers in the workplace.”

She added that the divide was damaging to organisations’ financial wellbeing: “As well as indicating the earnings gap, the pay gap represents lost productivity, where the skills and potential of women in work are underused. So getting an organisation’s response to pay gap reporting right will be good for women but also for the bottom line.”

The EHRC has the power to take enforcement action against any employer who does not comply with their reporting duties, and details of any employer investigated will be made publicly available on its website.

Along with the stick comes the carrot though – the commission hopes that publishing and monitoring pay gaps will help employers understand the reasons for any gap, and consider how to tackle the causes. As ever in risk management, what may seem to be a threat is also an opportunity, when responded to in the right way.

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