Need to know:
- Gender pay refers to the comparison of the average total earnings of men versus the average total earnings of women who work at the same organisation. This differs from equal pay, which explores whether men and women are paid the same for comparative work.
- Practical policy changes, such as equalising maternity and paternity benefits, can help to mitigate gender pay disparities when included within a diversity and inclusion strategy.
- Employers in science, technology, engineering and maths-related fields may choose to support external education programmes, to encourage more young women to consider a career in these subjects. This, in turn, can help to create a more even gender split at these organisations.
This month, the deadline for private sector organisations with more than 250 employees to report their gender pay gap data arrived. As of 4 April 2018, all eligible organisations should have published their gender pay figures, using the snapshot date of 5 April 2017, to reveal potential pay gaps for hourly pay and bonus pay between male and female employees.
The Gender Pay Gap briefing paper, published by The House of Commons on 6 April 2018, showed that 78% of organisations who reported gender pay data pay male employees more than female employees, based on median hourly earnings. Less than one in 10 (8%) of businesses reported no gender pay gap, while 14% of employers paid women more than men.
In addition, research by the Young Women’s Trust, published in July 2017, found that 10% of private sector HR professionals are aware of female employees in their organisation who are being paid less than male employees for jobs at the same level. With this in mind, it is essential that employers take action to instigate long-term change which seeks to eliminate gender pay disparity.
Dr Sumita Ketkar, senior lecturer in leadership and professional development at Westminster Business School, says: “[Addressing gender pay gap disparities] has to be [a] very organic process and [provide] some real structural changes. What [gender pay gap reporting] has done is made people aware; now [employers have] got to do something about it and that has to be done steadily rather than a one-shot, radical approach because [otherwise] it’s not going to be sustainable.”
Equal pay versus gender pay
The first challenge many employers have when addressing gender pay disparity is clarifying the distinction between gender pay and equal pay. Research by banking organisation TSB, published in March 2018, found that 73% of respondents believe that the gender pay gap is the same as equal pay. Charlotte Cooper, consultant at Stitch Communications, says: “That’s the biggest education challenge because people don’t understand the difference. The point to push is that equal pay is about salary and pay, and gender pay is about [the] progression of women within [an organisation].”
To clarify, gender pay is the measure of the total earnings of men compared to the total earnings of women who work for the same organisation. Chris Charman, principle at Mercer, says: “It’s influenced much more by the profile of work that men and women do and in which position in the hierarchy they do it.”
In comparison, equal pay relates to whether employers pay men and women the same for like work, or work of equal value.
Cause and effect
Based on organisations’ gender pay gap reports, there are several key trends behind gender pay disparities. These include organisations having a higher proportion of men employed in senior roles or working in more specialist roles that carry a pay premium, while more women, on average, are occupied in an organisation’s lower pay quartiles. This can be connected to a higher proportion of female staff working on a part-time basis. For example, 22.7% of media organisation Channel 4’s female employees work part time. As well as influencing its gender pay gap for hourly pay, this also contributes to Channel 4’s bonus gender pay gap data because the gender pay reporting legislation does not take in to account part-time working in relation to bonus payments.
Tara Howard, founder at employee empowerment organisation the Venus Awards, says: “[Employers] know it can be a hard issue to deal with because [they’ve] got [chief executive officers] at the top and a lot of women [working] part time at another level of the business.”
However, gender pay gap data should be used as an opportunity, adds Cooper. “[Employers] can’t change what [their] data is telling people, but [they] can shape the narrative that sits with that and that really has to be seen as the key opportunity for [organisations] to communicate with their employees,” she says. “This is an opportunity to wipe the slate clean, where necessary, and promote transparent new initiatives. Employees are the biggest advocates of [an organisation].”
Addressing gender pay disparity
So, what practical steps can employers take to address gender pay disparity? First, employers could look at family-friendly benefits, such as maternity and paternity leave and pay. Offering and promoting equal benefits here can help to equalise childcare conversations between parents, so that decisions around balancing childcare and work responsibilities are not purely finance driven, says Cooper.
Organisations can also support women back into the workplace after maternity leave, using mechanisms such as a phased return-to-work. For example, retailer Ikea allows employees to work half of their contracted hours at full pay for the first three months after returning from maternity leave. Cultivating employee networks, that are available for both genders, can also help facilitate diversity and inclusion conversations.
Some employers have introduced unconscious bias training to their recruitment processes to avoid interviewers making assumptions about candidates based on gender. “[An] example is assuming that a woman may not take a promotion because she has children, and that she may find [the] travel abroad associated with a more senior role as being maybe too logistically or emotionally challenging,” explains Cooper.
One approach that has been successful among some organisations is providing female staff with supervisory responsibilities or positions that enable them to learn new skills earlier in their careers, to better equip them for future promotions. “How [can employers] challenge [their] behaviours to be able to provide that early access and exposure?” says Charman.
Equal pay review processes, as well as effective governance around reward and corrective actions around pay errors are also important, says Charman. Employers could use analytics to understand how and where female employees are hired, promoted and retained in the business so employers can be more strategic in approaching pay disparities. “Where can [employers] have the big impact? Good data is important to create those focused insights,” adds Charman.
Organisation-wide diversity targets can be a useful metric for measuring gender pay gap disparities, however this can have advantages and disadvantages. “[Employers] don’t want to promote people for the wrong reasons, but on the other hand [setting targets is] a good way to monitor progress,” says Cooper.
The diversity and inclusion thread
It is important that employers also consider gender pay within a broader, holistic context, adds Charman. “It’s not about [employers] creating a [diversity and inclusion] position, but recognising that diversity and inclusion is something that needs to be a golden thread through all HR processes,” he says. “[Employers have] got those cultural and behavioural things in which more tangible actions need to sit.”
Linked to this, many employers are now adopting an organisational effectiveness programme that considers diversity and inclusion as a lever, adds Charman. “It’s not saying ‘what do we do to get more women?’ It says, ‘how do we really make sure that we’re operating in the largest and most appropriate pool to bring in the right kind of skills and talent?’ And ‘we need to make sure that those are diverse sets of skills and talents from large and diverse talent pools’.”
One way of achieving this is to offer staff flexibility, especially when managing work and childcare commitments. This includes part-time working, remote working and flexible-working arrangements. “If [employers] want more women in the boardroom, we need to have more men also at the school gates,” says Charman. “How can [employers] take gender out of flexibility and just talk about flexibility that people need so it doesn’t become stigmatised?”
Employers in science, technology, engineering and maths-based (Stem) sectors may look to increase their female headcount to create a more even gender split of their workforce. “Tackling the issue nearer to the root cause is a common one for [organisations that] have an interest in Stem subjects,” adds Cooper.
Organisations could, therefore, liaise with or fund relevant school or university programmes, provide work experience or mentoring opportunities, or use female employees as role models at external events. Organisations could also review their employer branding to ensure this attracts a diverse talent pool.
Communicating the issue to staff
Employers should consider tailoring their communications strategy around the organisation’s gender pay gap to account for various learning styles among different employee demographics. “Somebody who works on the shop floor is going to want to digest their information very differently to somebody sitting in head office,” says Cooper.
Communication methods could include animations and videos, infographics distributed after organisation-wide meetings, emails and an internal and external social media strategy. Case studies can be used to present new initiatives. “Cherry [pick] two or three women that have really benefitted from those initiatives and [publish] something about it,” Cooper explains.
Employers could also offer training to line managers to equip them to answer questions around the organisation’s gender pay gap results. Internal social media tools, such as Yammer, can help initiate these conversations and facilitate employees to ask questions. Senior leaders can also influence this, adds Charman. “[Employers] need to have leaders helping to role model and symbolically message support around the culture of inclusion in order for activities [addressing the gender pay gap disparity] to have an effect,” he says. “Leadership is utterly critical in setting the tone,” he says.
Although positive discrimination may be a short-term solution to gender pay disparities, the long-term investigation, which explores the impact diversity and inclusion has on pay, is no quick fix. As Charman concludes: “The important thing for organisations is to recognise [that diversity and inclusion] should be folded into what good business, good people practice, good reward management looks like.”