Narrowing the gender pay gap and ensuring businesses have a gender-diverse culture will undoubtedly benefit the bottom line as well as families, individuals and the UK economy. It stands to reason that more diverse businesses have improved decision-making skills, a more creative and engaged workforce and a wider talent pool. Yet even with willing acceptance of these facts, many employers and HR professionals are approaching the new gender pay gap reporting regulations with trepidation.
The date for compulsory collection of gender pay gap data to begin is creeping up, with UK businesses of over 250 employees required to record information on the difference between male and female salaries within their company – and publish that information on their website within the following 12 months – from April 6th this year.
Compliance with a new set of regulations sounds straight forward enough, but for most employers it presents three key issues: how to collect and report the data accurately; how to understand and explain the numbers to concerned employees; and, going forward, how to tackle the issues the metrics highlight.
Collecting and Reporting
The collection and publication of the required data may actually prove to be the most straightforward part of the equation, yet even this is likely to present various issues for HR professionals. Employers will be legally required to disclose six metrics and although compliance is only mandatory from April onward, some businesses have voluntarily been choosing to report their gender pay gap in advance.
The feedback from companies who are already following the regulations is that the process of ensuring the data is sufficiently clean and consistent enough to provide an accurate figure can be more problematic than originally supposed.
The regulations are prescriptive in their provision of a statutory formula and this will undoubtedly require familiarisation. The key requirement for this part of the process is to make sure the correct procedures are in place within your company and make the exercise as simple for your already time-pressed HR teams to implement as possible.
In this situation, the right software can make the process a lot more manageable and can ensure you meet your compliance requirements accurately. CIPHR has developed a new system report that allows users to generate the required statistics, based on system employee data. You can also configure the report to automatically run periodically and get sent to a pre-determined email distribution list or, alternatively, the information can be retrieved from the system whenever it’s required.
This last point on timing is crucial, as interpreting and understanding the data throughout your first year of collection is vital. For most businesses, collecting this information will be a leap into the unknown and although most would admit there is likely to be a gender pay gap within their organisation, many will be alarmed at how significant the gap appears to be.
Making sure that your HR system allows you to extract the right data with consistency and in a way that suits you in terms of ease and timing, will give you the chance to get some idea of the figure ahead of the final report next year, and build an explanatory narrative around what the information reveals.
Additionally, while regulatory compliance obligates you to publish figures within a year, it may benefit your organisation’s brand as an inclusive and transparent employer to publish the data early.
Regardless of when you choose to publish, you will want to give both yourself and your team time to fully understand the figures internally before publishing externally, and potentially facing a barrage of questions from employees and even the local press.
Employers will be required to publish the information on their company website in a way that is searchable by the public. They will also be required to publish their data on a designated government website.
Clearly the revelation of these figures will bring the issue of a gender pay gap into the wider consciousness of your employees and you need to be able to address any questions that arise as a result.
As with all figures, context is all important and being able to access the data easily gives you an opportunity to provide that context through narrative or a supporting statement.
Understanding and Explaining
In order to use the metrics as the effective tool they are designed to be, it’s important for all employees within your company to understand exactly what the figures do – and do not – demonstrate. This understanding needs to start from the top and filter down. Crucially, HR employees need to be able to explain the figures to others, so that process begins with their own careful consideration of the data.
The Office for National Statistics (ONS) estimates the overall pay gap to be 18.1% in favour of men, but its fundamentally important to understand that this does not mean men are paid more money for doing the same job. Different pay for people of the same grade doing the same job based on gender has been illegal for decades although it’s an obvious conclusion to jump to when discussing ‘gender pay gap’ some preventative measures may need to be taken to ensure misunderstanding doesn’t occur.
What it does highlight is that women earn less on average, probably because they are in lower paid roles. Firms that have lower female representation at senior level will naturally have a larger gender pay gap. Gender pay gaps in favour of men are usually driven by the fact most senior roles are dominated by men, which boosts the average male pay within an organisation.
Explaining this important difference in what the figures actually show, as opposed to what they may appear to show, needs to be part of a wider communication effort around the new regulations. Utilising the right software to allow you to view the data regularly and get a feel for what your own pay gap may look like, will give you the opportunity to discuss your response to that internally.
Employees will naturally have questions. Consider how you will respond to this in advance and how you will present a narrative to give the numbers some context – whether that comes from articles, infographics, encouraging open discussions or any other means of communication you use. Remember to remain aware that you are communicating with employees of all levels and nationalities, many of whom may not be as at-home in front of a spreadsheet or data analytics as those preparing the report.
Think about the questions your employees may ask in advance and prepare appropriate responses to their concerns.
Addressing the Issues
Even if the pay gap report doesn’t actually show that men are paid more for the same role, what it does highlight is that some organisations have cultural issues which prevent women from progressing through the company to reach senior levels.
To take advantage of the opportunity the highlighting of these figures presents, your company may need to think carefully about how it tackles those issues moving forward. Having a clear plan to address the gap will go a long way to alleviating employee concerns when the figures are made public.
Women lagging behind in terms of pay and progression is caused by a multitude of factors which schools, universities, businesses, childcare providers and the government all need to address with a coherent approach.
Be prepared to answer employee questions about what steps your organisation is taking to improve gender diversity. Demonstrate that your firm does understand the structural processes that cause the wage inequality and that you are taking steps to rectify this – perhaps supporting older women back into the workplace; addressing pipeline issues for more women to reach senior levels; offering high quality flexible or part-time roles; using gender-neutral language in your recruitment or attracting more women into the company culture.
The reporting of the gender pay gap will hopefully open up a wide-reaching discussion of the progression-related issues that stop women earning more and about female representation in certain roles. Using the data to look at longer term organisational change within your company can only be a positive thing in the long run and can improve your bottom line.
Greater gender diversity can decrease turnover, increase engagement, satisfaction and performance, widen your talent pool and offer a true representation of your diverse customer base.
These changes can only come once we become aware of where the issues lie. Instead of seeing adherence to the new regulations as obligatory compliance, let’s use the data to start a discussion to change the culture of the UK workplace for the better.
Find out how CIPHR can help you report on your Gender Pay Gap by calling 01628 814 242 or downloading the CIPHR brochure.