Should the gender pay gap be higher on your HR agenda?

The recent spotlight on the gender pay gap has captured affected employees’ and the public’s reactions to the publication of pay data.

The revelation that nine of the BBC’s top 10 highest earners were male, led to a media backlash and a petition by female colleagues to close the gap. Presenters including Emily Maitlis and Fiona Bruce signed the letter saying that the current situation is unacceptable in an “age of equality”. The BBC’s Chief Executive Lord Hall has pledged to close the pay gap by 2020. Meanwhile, the Financial Times’ journalists are threatening to strike after it was revealed that female employees are paid 13 per cent less than their male colleagues.

The deadline is looming for more organisations to calculate their gender pay figures. Medium and large employers will be obligated to measure and report metrics by April 2018. However, in our recent UK Reward Management Spring Survey, we asked what stage organisations were at in preparing for this reporting. Interestingly, out of over 170 organisations representing half a million employees in total, around 40 per cent were still at the planning stage. 

It is critical to understand what the reporting requirements are, what that picture is likely to look like for your organisation and how you are going to explain the lay of the land. The purpose of gender pay gap reporting is to achieve progression. By encouraging transparency around pay, it is hoped that the average 18.1 per cent national gap in earnings between men and women can be closed. Organisations’ data is published twice: once on their own website and also on a government hosted portal. On the company’s website, it must be accessible to staff and the public and retained for three years. To facilitate transparency and scrutiny around female progression, there is even a planned “naughty list” – naming and shaming those who are not complying. 

Given the widespread media coverage around the BBC’s figures, the BBC’s narrative around the figures was imperative for the corporation braving the storm and tackling accusations of discrimination head-on. Lord Hall did not shy away from the fact that the BBC needs to “do more”. However, he stressed that the BBC had already laid the groundwork in closing the gap by 2020, pointing to his role in increasing the number of women on local radio breakfast shows from 14 per cent to 50 per cent and his promise to have a 50/50 split on all presenting and lead roles by 2020. Lord Hall committed to achieving concrete pledges on an agreed timescale. In his response, he was open to ongoing consultation about progress being made ahead of 2020 and ensuring that going forward, employees feel that they can contribute to making the corporation an “exemplar on gender and diversity”.

Therefore, if a key lesson can be learned from the publication of the pay data for organisations so far, it is that planning your communications to support and explain the data is essential. Many respondents of our UK Reward Management Spring Survey flagged the fact that the communication of the data was their main concern about the new obligation. Respondents’ concerns focused on the need for a meaningful narrative about what the pay gap meant for their employees. Despite this, our UK Reward Management Survey also revealed that the gender pay gap was not included in the top three priorities of organisations’ 2017 HR agendas. 

Reporting on the top-level statistics is not straightforward, with many organisations auditing their gender pay gap figures ahead of schedule to assess the challenges they may face. This allows them to put in place an action plan, ahead of time.

Respondents in the UK Reward Management Survey highlighted three key concerns about the upcoming reporting:

  1. Methodology: understanding the mechanics of calculating the gap. These include identifying the correct employees, how to assess groupings by looking at the components of each role, which elements of pay and bonus pay to measure, when and how to value shares and options and which time periods to consider. 
  2. Logistical challenges: related to the methodology is how to address the under-representation of women in some sectors and roles that might complicate the reporting.
  3. Interpretation and communication: how to meaningfully explain what the gap means in context and avoid creating a false impression of pay inequality. 

Auditing ahead of the legal requirement to publish mandatory gender pay gap figures should be done under legal privilege. Organisations must get their in-house or external lawyers to provide the data and use an external third party like us to calculate the figures, to avoid having to publish them ahead of the April 2018 deadline.

We anticipate that more and more employers will calculate their figures ahead of April given the media coverage that the publication of high profile organisations’ gender pay gap data has already attracted. Although the UK Reward Management Survey did not capture gender pay reporting as being within the top three concerns of HR departments for 2017, this may well have changed in the last few weeks as thorny issues around communicating accurately and effectively have been highlighted. 

We are helping many clients meet their reporting duties through our free gender pay reporting service. If you would like to know more and have any questions around gender pay reporting, please email GenderPay@paydata.co.uk