Gender Pay Gap Reporting
The UK’s Groundbreaking System
The UK’s groundbreaking (most comprehensive ever collected in any country) gender pay reporting requirements came in fast and furious in the first week of this month to make the final early April deadline. Yet, some have sought to explicitly dismiss the results – and so implicitly the findings – based on arguments such as design faults producing ‘shoddy stats’ based on poor data points, not taking account of full-part time work in the bonus pay gap, very unlikely results, etc.
Of course, the fact that equity partners in professional services, the majority of whom are male, are excluded, so hugely understating gender pay gaps, is less noted on by these groups.
Anyway, the above view totally misses the point.
After all, this is not an exercise in the collection of figures somehow ‘accurate’ down to the ‘nth degree’ or an attempt to achieve a ‘purity’ of data. Rather, it is about a valuable process in its own right as it will drive transparency and accountability as well as prompt thought, action and improvement by exposing previously hidden company pay systems to the searchlight of forced tracking down and gathering of often previously uncollected data, reporting and attempts at defending.
This is an annual event and so will start to produce longitudinal data – what will have changed – and why or why not – this time next year?
Also, an important by-product is confirming sectoral variations between gender gaps that are high (financial services) and low (health and social work, hospitality), with the former highly paid and the latter, poorly paid.
Finally, an under-emphasised key point is that this is only the beginning. This is an annual event and so will start to produce longitudinal data – what will have changed – and why or why not – this time next year?
Of course, there remain issues. There are tactical ones, such as firms waiting until the last moment and a deluge of submissions in which to try to hide any embarrassing and implausible results – over 1000 companies reported in the final 24 hours despite having since 5 April 2017 to do so.
Also, there may be unintended consequences, such as weakening family-friendly policies. There are also strategic issues, such as outsourcing lower paid roles filled by women, while from the other side, a company’s increase in female apprentices may temporarily widen its gender pay gap.
We can note the following regarding companies and public sector bodies employing more than 250 people in terms of average median pay gaps:
- 8 out of 10 pay men more than women;
- There were large pay gaps in some sectors: construction (25%), finance and insurance sector (22%) and education (20%);
- There were small pay gaps in other sectors: accommodation and food services (1%);
- There were some eyewatering-ly large gaps, such as at Ryanair (71.8%).
This raises twin inter-linked questions. The UK gender pay gap is higher than both the OECD and EU average. Why is this and what can be done about it?
Of course, ’the devil is in the detail’, as always. Nevertheless, the large majority of firms pay women less on average than men as they occupy higher proportions of senior positions. This is similar to consistent earlier findings (Rowley, 2016). This raises twin inter-linked questions. The UK gender pay gap is higher than both the OECD and EU average. Why is this and what can be done about it?
What can be done?
Our research (Rowley et al, 2014) showed continued gender imbalance in senior posts and promotions with stymied female careers with barriers due to poor ‘signaling’ of success stemming from:
- Networks and nomination process bias;
- Role model and mentor shortages;
- Work-family balance;
- Cognitive behaviour.
In terms of what can be done, we can note the following. Cutting against greater gender pay parity by addressing lack of females in senior posts are a set of issues. Even organisational/structural ones are ground in and underpinned by deeper residing cultural ones. For example, even with greater emphasis given to work-family balance, tension remains between offering family-friendly policies, including part-time work, as it is often penalised with stunted pay and career progression.
To address this, firms need to:
- Normalise views of non-full time forms of work for all, not just females;
- Reduce perceptions about those forms of work traditionally done by females being seen as less valued; and
- Recognise and value (not penalise) less typical, non-linear career paths and patterns.
Some of the above, in turn, require HR interventions and reinforcements in areas such as job descriptions, job responsibility, reward and promotion systems and a key, cultural change.
Given the history of more than four decades of equal pay laws and that the earlier 2010 measure to encourage companies to voluntarily report gender pay data failed, change is unlikely to happen without rigorous, systematic and strong state intervention and statutory underpinning and effective enforcement mechanisms.
If we assume board level posts are more highly paid, promoting more women into the top quartile may have the following impacts. Some research, often from consultants, shows companies gain (although with the thorny correlation and causation and simply ‘counting numbers’ issue) business benefits, all with intuitive appeal, from more women on company boards.
These include better motivation, employee engagement, mirroring and understanding clients/customers, cognitive variety (bringing different experiences/values, new ideas), decision making and problem-solving, broadening the talent pool, corporate social responsibility, PR, image etc. and even financial (return on sales/equity etc) results. However, this may not be the case (BBC News, 2017).
This work is not as rigorous as peer-reviewed academic research and here, meta-analysis indicates a very weak relationship with board performance or no relationship at all (Klein, 2017). Also, not all boards or members are equally important/influential, make a difference to performance, etc. Nevertheless, this does not distract from the need to appoint more women to boards for reasons of equality, fairness, social justice and moral/ethical grounds.
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Headline image grayscale photo of man and woman by Rene Asmussen via pexels.com
BBC News (2017) 100 women: Do women on boards increase company profits?’, 2 Oct;
K.Klein, K. ‘Does gender diversity in boards really boost company performance?’, Knowledge@Wharton, 18 May;
Rowley, C. (2016) ‘Gender pay gaps in the UK’, Changeboard, 18/11/16;
Rowley, C., Lee. J and Lan, L (2014) ‘Why Females Might Say No To Corporate Board Positions: The Asia Pacific in Comparison’, Asia Pacific Business Review, 20, 4, pp.513-22.