The deadline for companies to disclose their gender pay gap may have passed, but complying with the regulations is just the beginning

Gender pay gap reporting has created a fresh impetus for change …

?The deadline for companies with over 250 employees to disclose their gender pay gap data may have passed in April this year, but complying with the regulations is just the beginning - there is much to be done.

Some of the first pay gaps to be reported prompted intense criticism. Indeed, I inadvertently propelled myself into a Twitterstorm by being loose in my language and trying to make my observations in a small number of characters.

My describing the data as “off” was intended to highlight that pay gap should not be confused with equal pay. With hindsight, and with more space than social media provides, I would have explained things more clearly. Even after we acknowledge some of the limitations of complying with the regulations, the results and the tone of the commentary from organisations demonstrated very clearly that the process of preparing their analysis and reports has helped them to recognise that much more is needed to be done to accelerate parity in the workplace. Whatever commentators were saying, it was clear to me from the reports - but even more from the work that organisations had done to generate the reports - that awareness of gender parity and the desire to address it had increased.

… but the results are clear …

My colleagues at EY, who advise companies in this area, recently shared with me their analysis of all 10,462 submissions to the Government’s pay gap reporting website that had been made by the 2nd May. 

The figures reveal men are paid more than women based on the median hourly pay in 77% of reporting organisations and, based on median bonus pay, 68% of organisations awarded higher bonus payments to men. Of the organisations reporting, only 9% of companies paid men and women equal, based on median hourly pay.

But what is most striking and more significant, is how the reports demonstrate the existence of significant structural gender inequalities in the workplace. The data has led to many organisations acknowledging the issue, committing to doing more to understand the drivers behind it, and importantly to identify ways to change it.

… and so are the reasons …

Having reviewed the results with my colleagues, it is clear that in the overwhelming majority of the cases, the gender pay gap being reported comes down to how many women are represented among the most senior levels in an organisation – and how frequently they are outnumbered by men at the top.

The proportion of women on FTSE 100 boards, for instance, is currently 27.9% and only 6% of FTSE 100 Chief Executives are women. As you move towards the top pay quartile of organisations, women are increasingly underrepresented. By contrast, at the lower quartile, women are overrepresented on average. The results are clear: there are fewer women as pay increases at more senior levels of an organisation.

Our analysis shows that women are under-represented at the top across the majority of reporting entities. 65% of organisations reported having less than 50% females at the top quartile, 41% reported having less than 30%, and 12% reported having less than 10% women at the top.

Further review of the ‘less than 10% statistic’ reveals that this is driven by predominately male dominated industries, where women are underrepresented across all quartiles. While there may be a number of mitigating factors, it is hard to see how these distributions reflect workplaces that have successfully removed the barriers to gender equality. Gender pay reporting has created a fresh impetus for change.

… creating momentum for change …

The commentary that accompanied the pay gap data suggested that some organisations are considering tackling their pay gap by reducing the number of women in certain roles to improve their gender pay balance. This text book identification of incentives is na?ve and misses the impact that the reporting has had on businesses. The numbers are not the key issue here. Organisations have not just published these results but, in many cases, have spent a great deal of time collecting and analysing the data and then working hard to understand what it is telling them.

Pay gap disclosures have opened up discussions within many organisations as they recognise the need to engage with their workforces on this matter to explain their data and to identify ways to improve their performance.

… with a clear way forward

The regulations have prompted organisations to revisit their plans and look at new ways to drive change. We analysed the reports of FTSE 250 companies made available through the Government’s pay gap portal and have identified three key themes on how to help accelerate gender parity in the workplace. In each area, we are seeing companies move into new territory, as they learn from their initial efforts and develop more refined approaches. Some of the key features are:

·      Recruitment – working more with recruiters to build balanced pipelines, targeting specific candidates, reaching into adjacent industries and greater use of blind selection.

·      Talent development – creating more tailored opportunities for high potential candidates that have been particularly identified.

·      Flexible working – creating a true flexible working culture for all, not just parents, with a strong Shared Parental Leave offering and visible senior role models.

Gender pay reporting may be regarded by some as a blunt instrument. However, it has shed light on structural inequalities that companies cannot ignore and has also created a renewed momentum for change.

EY advises organisations on all aspects of gender pay gap reporting and provides independent assurance over the completeness and accuracy of data. EY also runs the National Equality Standard (NES), whose assessment supports long-term sustainable change and provides a detailed roadmap with recommendations to drive improvement.