Mind the Gap – Gender pay reporting one year on

With the reporting deadline for the second year’s gender pay gap figures fast approaching, the government has issued new guidance to help employers further close their gaps. Professor Fiona Patterson, a founding director of Work Psychology Group (WPG), looks at how far organisations have come and what still must be done do to redress the unequal balance of male/female seniority, recognition and reward.

In April 2018, large organisations had to disclose the percentage difference between the average hourly earnings for male and female employees – known as the Gender Pay Gap (GPG). The exercise revealed a national disparity of 18.4%, with 78% of organisations paying men more. While the solution – to employ more women in senior roles – is widely acknowledged, the challenge has been about addressing this in an effective, fair and sustainable manner.

To this end, the Government Equalities Office (GEO) has published two new guides designed to help employers identify the causes of their gender pay gaps, and work with their staff to create robust action plans for tackling them. Organisations seem to be listening. Recent GEO research shows that 69% of employers now see closing their pay gaps as a high or medium priority, up by 8% on last year. Encouragingly, too, 67% are having these discussions at board level.

“We want employers to understand the causes of their gender pay gaps and create action plans that will close those gaps for good,” says Victoria Atkins, Parliamentary Undersecretary for Women.

The gap explained

GPG is the percentage difference between average hourly earnings for men and women. It occurs when more men than women are employed in senior roles, despite both sexes being paid equally for the same role.

Well-illustrated by reviews within the management and psychology literature, women’s career (in)equality is seen as a multilevel, dynamic phenomenon that reflects the degree to which women, compared to men, enjoy equal access to career opportunities, experiencing equal work outcomes (such as pay and promotions) and non-work outcomes (family). Reasons for the continuing inequality include:

  1. Unequal access to high-paying leadership jobs – Women constitute approximately less than 5% of CEOs and 20% of corporate board members. Despite performing as well as men, women are less likely to receive similar pay and promotions or advance in firms that don’t see their strengths, values and interests as aligned with leadership.
  2. Gender bias affecting how women are seen – Leadership traits apply differently, as men are ‘strong, competitive, assertive’ compared with ‘pushy, ruthless and bossy’ women.
  3. Caring and household responsibilities impacting careers – Working women spend more time on child and elder care than men. Many juggle by working in (often) lower-paid part-time roles with fewer opportunities for progression.
  4. Lower-paid roles and unemployment – Women are more likely to work in part-time or unskilled roles, accounting for 62% of those earning less than the living wage (Living Wage Foundation) while figures for unemployed women outpaced out-of-work men in April 2018 for the first time since 1980 (Financial Times).
  5. Discrimination – One in nine new mothers were dismissed, made redundant or resigned over poor treatment, according to the Equality and Human Rights Commission (ECHR), creating a gap in experience and leading to lower wages when women return to work after maternity leave.

Do targets help?

Some people think they do. Last year, top 10 accountancy firm PwC set itself a 50/50 recruitment target, abolishing all-male shortlists and is establishing more diverse interviewing panels, “as part of a wider drive for a diversity in the firm”.

The government, too, is determined that women should make up at least a third of board positions for the UK’s biggest companies by 2020. That’s an ambitious increase of 13% on the current position within just two years, especially in the light of typical excuses given by the top 350 firms to the government-backed Hampton-Alexander Review team, such as “I don’t think women fit comfortably into the board environment”.

On the other hand, experts such as Rob Briner, Professor of Organisational Psychology at Queen Mary University of London and Scientific Director of the Center for Evidence-Based Management, firmly believe that targets fail. This is because there is little robust benchmark data to begin with, so no-one knows what works and what does not. Or, once targets have been achieved, companies feel that the ‘job’ is now done, preventing them from doing the important thought leadership work around why diversity & inclusion (D&I) is important or devising a coherent D&I vision.

What organisations can do?

  • Have a clearly understood vision for Diversity & Inclusion that is fully aligned to individual and company goals, and with robust measurements in place to track progress.
  • Develop a more inclusive cultural climate that values differences, encourages equitable decision-making, promotes inclusive behaviours from leaders and managers and embraces leadership that recognises good interpersonal skills and collaborative participation – areas where women tend to display strength.
  • Learn from inclusive businesses where women feel able to ask for a pay rise commensurate to their value and be heard.
  • Encourage senior women to mentor or sponsor others, so women will fill a higher percentage of senior and higher-paid roles in the future.
  • Ensure that selection, assessment and development processes are fair and available to all.

WPG’s belief that continuing to investigate and resolve the gap will undoubtedly benefit organisations, is shared by CMI Chief Executive Ann Francke. As Ann describes, “Diversity delivers better financial results, better culture and better decision making.”

“At WPG we believe the solution is not just to pay women more (or alienate men by cutting their pay) but to focus on ensuring proper inclusion for all and introduce processes and cultures that will ensure fairer decision making, with everyone enjoying the same opportunities for growth and progression,” adds Professor Fiona Patterson.

If you are interested in any of the issues raised in this blog, or would like to explore how your organisation can address any remaining gender gaps in terms of pay and reward, please click here to get in touch.