Gender pay gap legislation: how much will it really change the world of business?

In our line of work, discrimination has no role to play. It is ineffective, serves to reduce opportunities for both clients and candidates, and causes only harm in the long run. However, there is good news: we don’t see much discrimination in our particular market.

The gender pay gap has long been touted as evidence that gender equality is something the UK still hasn’t got right. Not only that, research by organisations like McKinsey & Company (2015), shows it may be as late as 2069 before women achieve equality with men in terms of salary. With just over a quarter of women on FTSE 100 company boards, even fewer (16%) in FTSE 350 businesses, and with 52 companies in the 350 without female representation at all, it seems that at the highest levels, inequality is even greater than elsewhere.

It has long been agreed that the situation needs to be dealt with at a fundamental level, so this April, legislation forcing gender pay gap reporting has come into force.

Companies with over 250 employees must now record their gender pay gap figures, and publish them prior to the beginning of the next financial year, on their own websites and the government website.

The figures that are to be included are the gender pay gap (mean and median averages), gender bonus gap (mean and median averages), proportion of men and women receiving bonuses, and the proportion of men and women in each quartile of the organisation’s pay structure.

Although this is certainly a start in the right direction, there is plenty of concern that reporting is simply not enough to reduce inequality. For a start, according to the Financial Times in early May 2017, only five employers out of 9000 have reported their figures so far as there is another ten months to go before the reporting deadline, but personally, I’m unconvinced it will have a serious impact on the overall problem.

Although the market is generally positive about the change, I am finding a degree of scepticism about how much of a difference it will make. For example, one problem I noticed is that the reporting doesn’t take into account pro rata salaries for part-time working.

What’s more, while there is a large gap between the genders in terms of pay at certain levels, and an even larger one in terms of job roles (i.e. not enough women in board seats), it is clear to me that some markets are more equal than others.

Why does diversity matter?

In purely business terms, diversity makes sense. Diverse companies with a variety of people, genders, cultures, ages, and abilities, are far more productive and innovative, harnessing the positives from the differences and using those to make business better.

Gender diversity, just by itself, creates its own whirlwind of positivity, with gender diverse companies 15% more likely to produce better financial results than competitors. As with any other issue, the bottom line talks loudest.

But if the positives far outweigh the negatives, why does gender inequality exist at all?

Why does gender inequality still exist?

Insidious problems are the issue around gender inequality, and there is an argument that reporting gender pay gaps is not going to deal with the root causes of inequality in business.

For example, flexible working has not been fully embraced, despite the rise of the internet, the convenience of communications—including face-to-face proxies like Skype—and the awareness that a flexible workforce can be more productive and profit-making when working to their own timetables. Although 75% of businesses state they support flexible working, with 61% stating their company’s profit increased as a result, this is only at certain levels of management for most.

Employers are still concerned they cannot trust their workforce adequately to work hard at home.

Furthermore, many organisations do not nurture a respectful workplace, and disrespectful behaviours towards women – especially for those with families, who work part-time – are not being addressed, and will not be by this legislation. Inclusive behaviours, such as employing equal measures of men and women, engaging both genders in conversations about inequality, and of course, in the solutions, are key to dispersing disrespect at the root.

Why is the legislation not enough to change the equality disparities?

Dealing with root causes is generally considered to be the most effective way of handling any problem. This applies whether it is mental health issues, productivity problems, or equality. But in requesting companies to report on their gender pay gap, does the law deal with the root issues, or is this just a cosmetic approach?

A quick search on the internet and I found a Guardian article quoting a certain Sarah Henchoz, employment partner at the law firm Allen & Overy, who reported “the gender pay gap reporting provisions are likely to do more for pay parity in five years than equal pay legislation has done in 45.”

It is hard, however, from a recruitment point of view, to see how this will happen.

For a start, not only do UK companies have insufficient salary information to report on it, with 58% claiming they do not have the information available,

a massive 82% of companies surveyed by TotalJobs have no intention of reviewing their gender equality and pay structures, even with the legislation in mind.

How can recruitment companies help to reduce the gender pay gap?

Top-level recruitment agencies working in and around the City, are, as a rule, ahead of the game when it comes to dealing with discrimination and inequality. In my opinion, most professional recruiters operate in a way that positively promotes equality in all areas, and this makes sense, since talent comes from a wide range of people, and turning down opportunity isn’t good business. Wade Macdonald, for one, insists on ethical operations and refuses to accept discrimination in any form. This, in our view, is the best approach for recruiters across the industry.

That said, it is my belief that gender inequality is less marked in our particular market, one which is genuinely egalitarian, with jobs going to the most suitable candidate at the defined salary, regardless of gender. This is what I see on a daily basis, and have done for many years.

In fact, I’m afraid there are so many valid reasons for pay differentials that it is going to be mightily difficult to identify any deliberate offenders.

One way in which the legislation most likely will help is in allowing the identification of businesses operating a discriminatory pay policy. As well as helping candidates spot which companies they don’t want to work for, this could also assist recruiters as they decide which clients to work with.

However, my overall impression is that while no discernible difference can as yet be seen in the hiring practices or compensation of organisations certainly of those that we work with at Wade Macdonald, I have in fact seen very little difference for a long time in the pay rates between genders in our specific fields.

In my opinion, ageism is actually a far bigger problem than anything else. It is also true there is a predominance of males in senior leadership roles which is probably the root cause of gender pay inequality, although this also seems to be changing reasonably quickly.