March 4, 2016 By Lucy L.M. Phillips and Alison Minns
If you are one of the 8,000+ organisations that employ 250 people (or more) in Great Britain, then you may be aware that draft regulations have been drawn up by the Government Equalities Office and The Rt Hon Nicky Morgan MP requiring you to publically declare your organisation’s ‘Gender Pay Gap’. The regulations will come into force in October 2016 and employers will have 18 months from that date to publish the required information.
This is being introduced partially in response to the Office for National Statistics findings that the gap between men and women’s pay for full-time workers was 9.4% in April 2015, down from 9.6% in 2014.
The draft regulations can be found here >
Regardless of your views on levels of gender equality in the workplace, Boardroom quotas and the wider diversity agenda, this reporting will be mandatory and impacted companies need to consider 3 key questions:
If you answer ‘no’ to one or any of these questions, what action is available to you?
You have until midnight on March 11th 2016 to understand what is being proposed (Are bonuses included? What about shift allowances? Is it the mean or median?) and give your views on what modifications should be made to these draft regulations using the Government’s online system.
Review how the calculations should be made, what data is required, which of this you can easily obtain for your company and what will take more time and effort to gather. If you were able to calculate the pay gap for your company right now, using the Government’s methodology, what does the data show?
What other factors might be at play in the results? For instance, there is evidence to suggest this is not a one way street – in some agei groups the issue is with men being paid less pound for pound. Do your existing practices, polices and culture impact the findings? Monika Queisser, Head of Social Policy at the Organisation for Economic Cooperation and Development, has said research showed the gender pay gap was smaller in countries that offered better public childcare and parental leave arrangements.
A small number of companies are already leading the way by publishing this information (such as Tesco PLC, PwC, Genesis Housing Association) – so there are a handful of examples that show how this could be done. However, the majority of impacted employers still have to figure out their own approach.
We’d advise that this requirement is viewed as an extension of your ‘people strategy’. What will this data tell you about your organisation? Are there actions that could be taken now to address a less than impressive pay gap for either gender? What do you want people to understand? How could you align the publishing of this information with other
company initiatives – for instance, broader diversity activities, leadership development, training, work-life balance or company practices and policies?
You might also want to consider the context of your specific industry – different sectors have a history of being more balanced in terms of gender representation, whilst some are less so. Should that always be the case? Or is it a result of unconscious bias, with leaders hiring and promoting on the basis of ‘people like me’? As you consider your game-plan, think about the broader context of gender strides achieved over the past decade or so in your industry to put your findings into context.
Although views may differ on how equality in the workplace should be tackled (across all dimensions, not just gender), within virtually all FTSE100 companies (or those that aspire to get there) topics such as sustainability, talent retention and
succession planning are at the forefront of C-suite discussions. It is a rare (or rarefied) corporate culture that isn’t considering how to address these and stay relevant in the future —and many forward-looking organisations are eager to be seen leading on these initiatives. The findings and impacts from your pay gap data should be considered alongside these perennial topics.
The debate about gender pay is just one element of a broader discussion. The very nature of how British companies operate has changed dramatically over the past few decades. Whilst this could be seen as a forcing function to drag some kicking and screaming into the 21st century, it could also be a means of encouraging employers to measure so they can better manage.
This discussion also raises the question of what more can, or should, employers do to support diversity overall – from employees setting their own working hours at Netflix; to helping those with carer responsibilities or religious observances; to increasing paid leave for parents of any gender (and providing a supportive re-entry back into the workplace). This also raises overall pay and bonus transparency questions for senior executives and the seemingly increasing divide between the Haves and the Have-Nots.
It’s important to note that while the ‘Gender Pay Gap’ rulings are the latest government regulation to support diversity in the workplace, they will no doubt not be the last. It’s also important to note that there are some important milestones
being achieved. Notably the 30% Club, set up five years ago to lobby for more women at the top of UK companies recently achieved its target of having a quarter of the FTSE 100 boards appointing at least one woman.
The war for talent rages, and having clear policies and processes to support diversity is another means of an organization evidencing that it can differentiate itself in the marketplace.
FTI’s Employee Engagement and Change Communications team have broad industry knowledge and a deep understanding of change management to help guide leaders through these kinds of questions.
Having worked with clients to support merger integrations, acquisitions, restructures and changes in strategy and leadership, we understand how to engage, inform and stabilise a workforce.
All employers impacted by gender pay gap reporting should exercise their right to comment on these regulations, and forward thinking employers should also consider the bigger picture on what this means for their talent, reward, communications and engagement strategies….Mind the ‘Gender Pay’ Gap.
For more information contact one of the EECC authors, or download the PDF >