Mind The Gap! Gender Pay Gap Reporting, Five Years On

Reflecting on the successes to date, and looking at where the future of DEI reporting could take us.?

In 2017, the UK government introduced new legislation requiring all employers with 250 or more employees to submit gender pay gap reports, with the first reports submitted in April 2018. I won’t be demure with my opinion on this, I am in full support! Gender pay gap reporting forces companies to look at where in their organisation they employ women, and how they are compensated in comparison with their male counterparts.?

Over three-quarters (77%) of reporting employers stated that median hourly pay was higher for men than for women in their organisation.(1)

This huge gap is exactly why reporting is important and necessary.?

So, 5 years on from the legislation being passed, 4 years on from our first reports, what impact has it had, and what might we expect in the future?

In 2019, a year after the first reports were published, the CIPD shared some key learnings. Unsurprisingly with this being the first year of reporting, a large proportion of HR professionals lacked awareness and understanding of the reporting and its impact. Only 8% of organisations acted as a result of publishing their gender pay gap(2), nothing to write home about maybe, but 8% is unquestionably much better than nothing!

Fast forward to 2021 and LSE reported much more significant progress.?

Employers affected by the legislation have now narrowed the wage gap between women and men by almost one-fifth (19%) on average(3)

2021 also saw the Gender Pay Gap Bot enter Twitter(4), dedicated to surfacing the results of gender pay gap reports and making it easier than ever for people to see which companies are doing great and which have room for improvement. They are particularly worth checking out on International Women’s Day (8th March) when they set to work sharing the pay gap reports of all companies who head to social media to celebrate their female colleagues.

To me, the positives seem well worth the effort it takes companies to report this. Lessening the gender pay gap can increase gender diversity within organisations, the benefits of which are well documented. A McKinsey study in 2019 found that the most gender-diverse organisations are 25% more likely to have about average profits than their least diverse peers(5), and other studies have indicated that diversity can reduce company risk by up to 30% and improve the quality of decision-making by 20%.(6) In addition, the legislation for reporting has opened new roles and required new skills of HR departments to ensure they have analytical, data-driven colleagues in their teams. I think we will see a lot more from these colleagues in the future, so what could that be?

In March of this year, the UK government confirmed they would not yet make it mandatory for companies to report any ethnicity pay gap statistics,(7) however, it feels like this could be on the horizon. The very next month, in April of this year, the UK Financial Conduct Authority (FCA) announced rules requiring listed companies to report information and disclose against targets on the representation of women and ethnic minorities on their boards and executive management teams,(8) impacting all listed UK companies, so those reporting skills are needed again.

If you want my prediction on where we’re heading once ethnicity pay gap reporting reaches the levels of maturity that we see with gender pay gap reporting, I will hazard a guess that education pay gap reporting would be next on the list. There are some interesting studies already looking into the ‘Class Ceiling’, with class and education closely linked, and having an impact on access to and progression within careers. For more about this check out this podcast.(9)

“Within Britain’s elite occupations, the advantages of class are still mistaken for talent.”(10)

I’m super glad I’m alive at a time and in a place where I can have an ambitious career and not feel stinted in my progress by my gender, it is scary how recently women got this privilege. I’m excited about the future that my own daughter will exist in, with even more equity and opportunities open to her, I’m hopeful for the progress will we make in other necessary areas of DEI focus, and I look forward to doing a ‘10-years on’ article where the gender pay gap is gone, and we’re celebrating the success of ethnicity, education and class pay gap reporting!?

#hr #peopleandculture #genderequity #genderpaygap #diversityequityinclusion #diversitymatters

I can’t make it through a whole article on reporting without some mention of the power of having a good HRIS. If you work in HR and are wondering how you can become people data experts reach out (spoiler; I will be recommending you start with a robust HRIS platform!).?

Other points of interest:

In my research for this article, I came across some other interesting findings that I didn’t want to focus on here, but would love to hear people’s thoughts on:

• The drop in the gender pay gap up to 2021 has been driven primarily by men at employers who had to report the gender pay gap experiencing slower wage growth than those at comparable organisations not covered by the reporting policy. Was this surprising to anyone else? My assumption would have been that the gap would have been closing due to women being afforded higher paying positions rather than any change to the pay of men. Undecided on how I feel about this!
• When you think of the gender pay gap, what would you initially think causes this? Pause for a moment and decide what you would attribute it to… it has been found that women are more likely to attribute it to more men being in senior positions along with women workers being more likely to have childcare responsibilities, whereas men attribute it to workers having different jobs within a company. Were you different??

References

1. Not just a number: lessons from the first year of gender pay gap reporting, CIPD, April 2019. https://www.cipd.co.uk/Images/gender-pay-gap-reporting-lessons-1_tcm18-55693.pdf
2. Not just a number: lessons from the first year of gender pay gap reporting, CIPD, April 2019. https://www.cipd.co.uk/Images/gender-pay-gap-reporting-lessons-1_tcm18-55693.pdf
3. Wage responses to gender pay gap reporting requirements, Jack Blundell, March 2021. https://cep.lse.ac.uk/_NEW/PUBLICATIONS/abstract.asp?index=7804
4. https://twitter.com/PayGapApp
5. Diversity wins: How inclusion matters, McKinsey, May 2020. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters
6. The diversity and inclusion revolution: Eight powerful truths, Juliet Bourke, 2021. https://www2.deloitte.com/us/en/insights/deloitte-review/issue-22/diversity-and-inclusion-at-work-eight-powerful-truths.html
7. Policy paper: Inclusive Britain: government response to the Commission on Race and Ethnic Disparities, UK Government, March 2022. https://www.gov.uk/government/publications/inclusive-britain-action-plan-government-response-to-the-commission-on-race-and-ethnic-disparities/inclusive-britain-government-response-to-the-commission-on-race-and-ethnic-disparities
8. Diversity and inclusion on company boards and executive management, FCA, April 2022. https://www.fca.org.uk/publication/policy/ps22-3.pdf
9. WHO GETS ON IN MODERN BRITAIN: BREAKING THE CLASS CEILING, Reason To Be Cheerful Podcast, October 2021. https://www.cheerfulpodcast.com/rtbc-episodes/who-gets-on-in-modern-britain
10. Within Britain’s elite occupations, the advantages of class are still mistaken for talent, Sam Friedman and Daniel Laurison, February 2019. https://www.theguardian.com/society/2019/feb/07/the-class-pay-gap-why-it-pays-to-be-privileged