My Fair(ly paid) Lady? Gender Pay Gap Reporting: Act 2

Blog posts

12 Feb 2019

Duncan Brown, Head of HR Consultancy 

With the round two deadline of gender pay reporting fast approaching, early indications of patchy progress amongst some leading employers, and the potential for enhanced reporting requirements from Government, now is a good time to think about what actions employers need to take. From IES’ research to date, three key actions stand out: study your workforce to understand the location and causes of gaps; adopt a wide-ranging HR and diversity action plan; and take a long-term approach, evaluating your progress.

 

 ‘Why can’t a woman be more like a man?!’ Rex Harrison famously lamented in the second scene of My Fair Lady. And with just eight weeks to go until the second annual deadline for UK employers (with more than 250 employees) to publish their gender pay gaps (GPGs), there may be plenty of HR leaders expressing similar exhortations for greater convergence in average pay levels between the genders. The pressure on the 78% of them reporting a gap in favour of men in the year to last April to take action, in order to reduce and hopefully remove their gaps, is undoubtedly mounting.

In addition to the comparisons with the national earnings gap and with league tables of your competitors will come this year the additional press reporting of your figures compared with the previous years’, highlighting static or even worsening gaps. Much to the Government Equalities Office’s (GEO) delight, and at least partly down to their well-judged reporting legislation, the national average earnings premium for men has indeed reduced, from an all-employee median of 18.4 per cent in 2017 to 17.9 per cent in the ONS’ latest data.

But at the individual employer level we are likely to find a much more mixed picture. 975 employers have posted up their gender pay data so far this year, against the 10,536 who reported in 2017/18. A neat new green ‘comparison’ button on the government’s listing website  allows you easily to compare employers with each other and with their previous year.

So just choosing at random, we can see for example, that in 2017-18 consulting firm Accenture had a 10.2 per cent median gap compared to McKinsey’s 14.3 per cent. In the current year their advantage was retained, although the gap had worsened in both cases, to 10.6 per cent and 17.8 per cent, respectively. Bain and Boston Consulting Group reported the highest median gaps in this sector at 36 per cent and 35 per cent, respectively, last year and we await their 2019 figures.

Already MPs on the Business, Energy and Industrial Strategy Committee have called for the requirements to be toughened and for the government to make the development and reporting of action plans compulsory. Such a move is also supported by the Equality and Human Rights commission, who published research in December showing that only one in five of the 440 employers they studied had published a plan outlining how they were going to tackle their gender pay gap.

So just what are employers doing now that their gaps are out in the open? Is action planning becoming more common? And even more importantly, what actions are likely to work for them in reducing their reported gaps next year?

The GEO released a survey last month of 900 employers in which the proportion claiming to now have a good understanding of their GPG had increased from 48 per cent to 82 per cent over the previous year. 83 per cent had published a voluntary narrative alongside their figures to explain the gaps, although the qualitative follow up interviews highlighted ‘a relatively passive attitude to GPG’. In terms of closing the gaps, there was a fairly even split, with 34 per cent having developed a formalised plan, 16 per cent already having taken some action, 33 per cent  intending to take action in future, and 30 per cent with no intention to act.

I saw some excellent examples last week of the types of gap-busting actions that the EHRC (and IES) have been calling for. I co-presented at three meetings of HR and diversity professionals from over 50 institutions organised by the University and Colleges Employers Association (UCEA) to launch their new research on the progress being made in Higher Education, very appropriately entitled, Taking Action: Tackling the Gender Pay Gap in Higher Education. The research results, case study presentations and discussion highlighted that this is a sector that others, including my own of consultancy, would do well to study and learn from.

Twelve years ago the median gap in HE was 25 per cent - three per cent worse than the gap in the UK economy as a whole and with the lack of females in professor common rooms particularly noticeable. By last year this had been reduced to 14 per cent and was still lower in a number of the case study institutions who presented alongside Viola Salvestrini from UCEA, who conducted the research, and me.

So, what did we learn about gaps and how to close them? I would highlight three lessons.

Action Needed

1. Know thyself and thy workforce. 
The structural factors in the economy and society, which private sector employers love to blame their gaps on in their narrative reports – of vertical segregation of the labour market, with women more likely to be in lower paid roles and fewer of them in the top jobs, and horizontal segregation, with women less likely to be in higher paying occupations such as science and IT - are undoubtedly present, but not insurmountable, so long as you really understand your own workforce and what is really driving the gaps.

In HE, a Russell Group science-focused, research-intensive university, or one with a large business school, is almost certain to have a gap that is much larger than a more gender-mixed, arts-focused institution. The Royal Central School of Speech and Drama, which hosted our last event, for example, reported a median gap of 1.9 per cent in favour of women staff last year. But what was clear from the research, and particularly the case studies, was that each employer is different and the Royal Central’s action plan is and needs to be different from Trinity Laban’s or South Bank University.

The universities benefit from the fact that, as IES recommends, nine in ten have carried out equal pay audits and thereby gained a much better understanding of where their pay gaps are located and what might best help in closing them, compared to just a single figure percentage of private sector employers.

2. Implement a wide-ranging action plan that extends well beyond pay and reward management.
The energy and range of actions to close gaps was evident across all of these HE institutions, with 94 per cent having either published an action plan or having it as a work-in-progress. Stakeholder involvement in planning and progressing these actions, which IES found to be an important contributor to success in its research for the EHRC, was widespread, with 80 per cent having their plans signed off by senior management, four in ten involving trade unions and staff networks, and 21 per cent involving student unions.

But what is most striking from the research findings and the case examples is the range of actions that are being taken and required to address this complex and multi-faceted issue. Nine in ten are taking action on aspects of pay and reward, such as limiting discretion in new starter salary setting. But 100 per cent were acting on recruitment, such as introducing more transparent and gender-blind processes; over three-quarters acting on flexible working, and nine in ten on staff development. The GEO’s survey revealed a similar breadth of initiatives, with 87 per cent acting on flexible working and 62 per cent implementing gender-specific recruitment and promotion schemes, for example.

Talent management initiatives to address the historic segregation pay and occupational problems were particularly evident in the UCEA case studies, with actions ranging from increasing participation on the Aurora leadership development programme in the sector, to reframing administrative roles and job descriptions to encourage more male applicants. Both the universities of Leeds and Glasgow were able to report impressive progress in female applications and subsequent appointments to professor posts.

3. Recognise this is a long-term process that requires planning and measurement.
Despite the wide range of immediate actions on show, the emphasis from all those taking part in the research was that this takes time, and not everything will work. Unconscious bias training remains universal, despite the very mixed record on impact in research studies, and clearly on its own, is never going to fix your gender pay gap. Most participants were taking actions which they recognised would be long-term in their impact, such as developing new career pathways in teaching and identifying high potential staff, or encouraging more female applicants for STEM subjects, and creating a more flexible, agile working culture. But even in this sector, measuring and evaluating the impact of initiatives was seen as a key weakness in current plans that needs to be addressed.

So ‘an encouraging start but a long-way to go’ might be this year’s appraisal rating on their gender pay gap performance for many UK employers. As the GEO concluded in its research: ‘the introduction of the transparency regulations has succeeded in driving up employer awareness and understanding of GPG’. But ‘if the regulations are to have a significant impact on overall GPG, more widespread and specific actions by employers will be required’. You can find more research and case examples and ideas on IES’ gender pay resource hub and the GEO have just published some really helpful action planning guidance today.

The clock is ticking. ‘Just you wait Henry Higgins, just you wait!’