According to a recent study, the majority of people failed to properly understand published gender pay gap figures. Employers should be using the gender pay gap reporting process as an opportunity to improve diversity and equal pay, to educate their staff and clients and to promote the initiatives they are taking. Treating reporting as simply a tick box exercise not only undermines the policy reasons behind the implementation of the reporting requirements but it also could lead to adverse publicity if employers are called out by their staff, in the press or on social media.
Here are some top tips to help employers who have published their gender pay gap figures.
Step 1 – Analyse your data
Employers need to analyse their pay gap data in order to understand the primary reasons for the pay gap and identify areas which require improvement. Presentations should be given to staff to help them to understand the meaning of the figures and the steps their employer is taking to lessen any gaps (tips on doing so are set out below).
Pay disparity should be investigated at every level, taking into consideration gender composition and retention at each grade and within different teams. Employers should also include data in their analysis which provides a broader context to pay issues. As a starting point, organisations may consider recruitment figures, promotion rates, composition of boards and executive committees, and the availability and take-up of flexible and part-time work.
Step 2 – Commit to an action plan
Next, employers should formulate and implement an action plan. This should involve taking proactive steps to address underlying gender pay issues and setting objective targets for the upcoming reporting year. By way of example –
- Identify two or three areas which require improvement;
- Set targets and time frames for development in these areas;
- Formulate a plan for achieving these targets; and
- Implement the action points within the plan.
Recommended business initiatives include the following:
- One of the most commonly cited contributing factors to the pay gap is a disproportionately high number of men in senior positions, in comparison to their female counterparts. If gender imbalance within senior roles is a key issue for an organisation, employers should consider what they are doing to promote and encourage women to progress to these positions. Action points for development include introducing sponsorship schemes to encourage career progression and compulsory training to ensure that all managers treat employees equally when offering development opportunities.
- Remuneration structures can be improved by ensuring that starting salaries are monitored and future pay is aligned with employee appraisals. If pay is negotiated, salaries should be scrutinised to ensure that they are within specified boundaries for each grade of employee. If there are gender differences, organisations may need to review the criteria by which salary bands are applied. Employers should also consider the extent to which managers exercise discretion over pay packages. Steps to help this include audits to monitor gender bias, unconscious bias training and a protocol for managers to justify all pay decisions and starting salaries to HR.
- If there is a general pattern of fewer women across an organisation or in particular roles, employers should consider their recruitment processes within the wider context of ensuring diversity amongst applicants. In particular, all job advertisements should be gender neutral in language and where possible, all positions could be advertised as flexible by default. The risk of bias can be removed by prescribed scoring systems and tests.
Step 3 – Monitor your progress
Employers must continue to monitor their performance in promoting gender diversity and pay parity, and those with significant gaps to close should consider quarterly reporting at board level. To demonstrate commitment to closing the pay gap, employers should consider appointing a committee or designated individuals to deal with diversity and inclusion issues, and assign responsibility for managing progress to members of the senior management team.
Step 4 – Preparing and presenting your report
When it comes to compiling future gender pay gap reports, employers should ensure that figures are presented in an easy format to comprehend. It will always be best practice to accompany data with an explanatory narrative, focusing on what the organisation has done to combat pay issues over the course of the year, the effect this has had on pay disparity, and future actions the employer will take to further narrow the gap. Reports should be transparent and engaging for employees, potential recruits and clients. Employers must avoid the temptation to divert attention from poor figures by making reports overly complicated or difficult to understand.
Timing is also critical. Firstly, employers must prioritise preparation and not underestimate how long they need to compile their report, or for teams to collate relevant data. An organisation may also consider aligning the obligation with other internal or external reporting deadlines. In addition, employers are advised to ensure that data is published at a time when HR has the capacity to be fully engaged with any response.
Step 5 – Go above and beyond
Lastly, employers must keep in mind that reporting should be viewed as an opportunity to reflect on areas requiring improvement within their organisations. According to a report by McKinsey, businesses with higher gender diversity are 15% more likely to out-perform their industry average, and it is estimated that closing workforce gender gaps could add £150 billion to the UK GDP by 2025. Employers must not settle for achieving a comparable wage gap to their competitors, but consider going above and beyond the bare minimum to add value to their business.
Careful analysis of pay gap data and narrowing the pay gap should become a strategic objective, which employers continue to proactively invest in as part of their overall business planning and goals.