Need to know:
- Eradicating gender stereotypes could help to bridge the pay gap.
- Pay audits must include additional remuneration.
- Efforts to close the pay gap should be supported by workplace cultures that embrace and facilitate diversity.
The inconsistency in remuneration between male and female workers compelled the government to pass the Equal Pay Act in 1970, which legally entitles men and women to receive equal pay for equal work.
Yet, there is still a 19.2% gender pay gap in the UK, when considering full- and part-time median earnings, and a 9.4% gap for full-time earnings alone, according to the Office for National Statistics’ (ONS) Annual survey of hours and earnings, 2015 provisional results, published in November 2015. Meanwhile, the mean average of full-time male and female hourly earnings, the measure used by organisations such as the Fawcett Society, puts the gender pay gap at 13.9%. Whichever measurement is looked at, there is clearly much more to be done.
There are a number of factors behind the gender pay gap, including the under representation of women at senior level. Lord Davies’ Women on boards report, released in February 2011, highlighted the need for greater equality between the treatment and pay of male and female workers. It was primarily driven by the fact that 88% of FTSE 100 boards’ seats were occupied by men, and that if boards changed at a continual rate it would take 70 years to achieve gender balance.
The report recommended that FTSE 100 companies aim for a minimum of a quarter (25%) female representation on their boards by 2015.
In October 2015, Women on boards: 5 year summary (Davies review) found that women now make up 26% of FTSE 100 boards and 20% of FTSE 250 boards. The review also reported a significant reduction in the number of all-male boards in the FTSE 350; there were 152 in 2011, whereas in October 2015, there were no all-male boards in the FTSE 100 and 15 in the FTSE 250.
The review has now set a new target of 33% female representation on FTSE 350 boards by 2020.
Petra Wilton, director of strategy and external services at the Chartered Management Institute (CMI), says: “We’ve seen great progress with the report because it set a focus, but there are still huge issues in the FTSE 350, so we need higher targets of the amount of women on executive boards and in director roles, to push progress more quickly and widely.”
Steps to success
One of the government’s key pledges to eliminate the gender pay gap is to make it a formal requirement for organisations with more than 250 staff to publish the difference in average pay between male and female employees. In October 2015, the government extended its plans for pay gap reporting beyond voluntary and private sector organisations to cover large public sector employers, and announced plans to include bonuses within the reporting requirements.
Further efforts to narrow the gap include: working with businesses to eliminate all-male boards within the FTSE 350; working to achieve notable progress in the number of women taking up senior executive and executive director roles across all sectors, as well as the number of women being offered these types of roles in the first instance.
In order to achieve these goals, employers will also need to work on evolving their workplace culture to create environments that thrive on equality and diversity, says Mandy Garner, web editor at Workingmums.co.uk. This would involve breaking down barriers that stall the career and pay trajectory of women. “The job market needs more quality part-time jobs because many women are moving to jobs that are closer to home but paid less, just so they can balance childcare with work,” Garner adds.
Taking action to eliminate gender stereotypes could also help narrow the pay gap, particularly when it comes to the sectors and roles women are encouraged into. “The gap needs to be bridged between what’s viewed as a ‘female’ role and what’s seen as a typically ‘male’ role,” says Garner.
If employers actively combat gender stereotypes and the consequences of these stereotypes, such as the gender pay gap, they are more likely to equalise pay in their organisation, adds Duncan Brown, head of consulting at The Institute for Employment Studies.
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One of the government’s key initiatives to address the gender pay gap is something that employers will have to incorporate into their own organisations from spring 2016: compulsory gender pay gap reporting requirements.
Employers could take a proactive approach to the reporting requirements by conducting a pay audit. Wilton says: “Pay audits are carried out by pay levels, which are dependent on the scope of an organisation. Employers need to segment the data to figure out where they can make a difference.”
Giving staff insight into the organisation’s pay data after carrying out the audit can improve employee engagement, adds Garner. “Reporting back will really boost engagement with the data, especially if employees know something is being done about any problems,” she says.
Pay audits involve the total remuneration that employees receive, including salary and bonuses. The extension of the government’s gender pay reporting requirements to include bonuses should therefore paint a better picture of the overall pay staff receive.
Kathryn Nawrockyi, director of gender equality at Business in the Community, says: “It’s hugely important that organisations clearly define pay, as well as how bonuses are given.”
The way bonuses are distributed can vary, so for accuracy, employers must include how and why bonuses are awarded. “Understanding bonus payments is so important because these can significantly skew overall remuneration,” says Wilson.
Narrowing the gap
To be perceived as an attractive employer, organisations need to eradicate any negativity associated with them that could result from the failure to take action to address the gender pay gap. Tom Hellier, UK practise lead, rewards, at Towers Watson, says: “It’s very outdated to think it is ok to have any sort of pay gap, so employers need to plan how to mitigate against it if they discover they have one. After all, they are not sending out a particularly good message if they fail to address it.”
On the other hand, Brown believes that the high number of responses to the government’s equal pay consultation is an indication that employers are recognising the significance of gender equality issues such as the pay gap and are beginning to engage with them. Therefore, how many organisations are engaging with the pay gap means employers are engaging with the issue.
Employers such as Deloitte (see case study) and Camden Council, which have already voluntarily published pay data, have set themselves apart, says Nawrockyi. “Releasing [pay] data is a really positive step for employers to show they are committed to achieving transparency. It also means they’re holding themselves publicly accountable and committing to doing something,” she adds.
To engage staff with the organisation and demonstrate their willingness to narrow the pay gap, employers need to follow up the publication of pay data by communicating the figures to staff along with planned actions to close the gap. Garner says: “It’s really difficult to argue something without the numbers to back it up, and revealing the pay gap gives a message that [employers] want to change it, but there is much more employers need to do other than find the numbers.”
From voluntarily publishing gender pay gaps, to implementing gender equality initiatives, there are numerous actions employers can take. And with organisations such as HSBC vowing to appoint women to half of its senior roles, it is clear that some employers are taking a proactive stance. But there remains much more to be done to close the gap, particularly because, according to research by Reward Gateway, published in November 2015, 79% of employers do not believe a gender pay gap exists in their organisation.
Viewpoint: How the gender pay gap was formed
It is important to start with acknowledging that pay inequality is rarely due to women and men in the same role being paid differently. A huge amount is due to the dominance of men in more senior (and higher-paid) positions.
Other causes include women being more likely to work part time and workforce split, and women dominating professions such as administration, cleaning, caring and catering, with men dominating professions such as construction, engineering or skilled trades.
This does not mean that organisations can breathe a sigh of relief; organisational cultures are often tilted to benefit existing male leadership, creating barriers for women wanting to increase their pay. In promotions, bonuses and performance reviews, women are overwhelmingly likely to receive less than male colleagues. This usually stems from unconscious biases, which lead the existing male management to place greater value on the work done by the male colleagues that they have affinity with. The result? The gender pay gap will always increase as one moves up the organisational ladder.
Therefore, the gap is a reflection of the dominant, conforming workforce. Introducing diversity by increasing the number of women in senior positions or male-dominated professions introduces new thinking, ideas and reduces groupthink. Diversity also brings business benefits, such as new products, customers and revenue streams, and delivers increased profits.
Only by normalising the presence of women as organisational leaders will the gender pay gap be eradicated at all levels of an organisation.
Denise Keating is the chief executive of the Employers Network for Equality and Inclusion (ENEI)
Viewpoint: Build on the basics to bridge the gap
In July 2015, David Cameron pledged to end the gender pay gap in one generation by forcing large organisations to publish information about the difference between the average earnings of male and female workers.
The TUC (Trades Union Congress) wants the government to go further in its legislation, but there is already action employers can take to ensure their female staff are being paid fairly compared to males.
For example, organisations could publish their gender pay gap and make sure it is shared with all staff and unions. Giving the information voluntarily could lead to useful discussions, further investigation and action to close pay gaps.
As well as an overall gender pay gap figure, bosses could also publish information about the number of men and women in the workforce, the part-time pay penalty, pay gaps within grades or job roles, and pay gaps in bonuses and other pay.
Tesco is one of the few businesses that has voluntarily published its gender pay gap, which is a great start. But a figure on its own lacks meaning and explanation, so organisations could provide a supporting narrative that shows how the gender pay gap is calculated and what action is planned to narrow it.
Bosses can carry out regular full equal-pay audits, identifying where men and women are doing equal work, comparing their pay and closing any gaps that cannot be justified. Also, equal-pay questionnaires would allow staff to ask their employer for information about their pay and that of colleagues.
Sally Brett is a senior equality officer at the Trades Union Congress (TUC)
Deloitte publishes pay data to demonstrate commitment to equality
In August 2015, Deloitte voluntarily released its pay data prior to this becoming a compulsory requirement for large employers under the government’s gender pay gap reporting plans.
Deloitte wanted to publish the data before it became compulsory to demonstrate to its 15,000 UK staff that it is fully committed to gender equality.
The data showed that the financial services firm has a gender pay gap of 18%.
Emma Codd, managing partner for talent at Deloitte, says: “Attaching a number to something gives it leverage and shows what you’re actually aiming to improve or change.”
Men hold 17% of Deloitte’s highest-ranking and paying roles, which is why the organisation is working on a culture shift to make it more inclusive and ensure each employee is judged solely on their value to the business.
Codd believes that women are not typically attracted to the financial services industry, which makes it more difficult for an organisation such as Deloitte to recruit and retain female talent. “Finance isn’t a particularly female-dominated sector, so, as well as a returners’ programme for women who have not been in the workplace for five or so years, we also have a maternity returners’ programme, which is based on guiding and coaching new mothers back into the workplace,” she says.
However, Codd recognises that an inclusive culture shift is not something that can be achieved quickly. She says: “This is not something you can change overnight; it a long-term initiative so it needs to be strongly driven.”
Deloitte’s initiatives to drive culture change and bridge its gender pay gap all come down to evolving its environment for the long term. Strategies that cost very little can often be tremendously effective, such as boosting employees’ awareness of female role models within the organisation.
ThoughtWorks reduces gender stereotypes and pay gap
Global software consultancy firm ThoughtWorks connects its internal values with the attraction and retention of female talent. Its three key values are: being a sustainable business; championing software excellence; social and economic justice.
ThoughtWorks makes its decisions as an organisation based on these values, as well as attracting women to its tech-based roles and championing those within the organisation.
In 2013 and 2014, 50% of the organisation’s new graduate recruits were women. However, Ruth Gorman people specialist at ThoughtWorks, says: “We are still seeing far less women in more senior roles, so we constantly develop women into internal role models.”
ThoughtWorks encourages its 3,500 staff to share their experiences and success stories. For example, it offers a group for parents returning to work, which 27 employees (10%) currently attend. The group allows employees to informally share experiences and tips to help their colleagues balance childcare and work responsibilities. The organisation also runs Women in leadership development (WILD), a global leadership programme for its female staff.
These initiatives aim to eradicate gender stereotypes in the industry and in turn help to close the pay gap. Yet Gorman feels there is still much more that can be done. She says: “The reality of getting women into tech roles is that the gender imbalance still exists, so it’s crucial to show that it’s possible for women to thrive in a typically male-dominated sector.”