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Measuring the Gender Pay Gap: The 5 HR Metrics Law Firms Need to Know

Posted by Sian Webb on Aug 16, 2019, 3:52:59 PM

Law firms have had an interesting few years following the beginning of the UK gender pay gap reporting legislation. 

It’s fair to say that the legislation has, more or less universally, exposed large pay gaps across firms and the wider sector. For the legal sector workforce, the gender pay gap is heavily impacted by the number of female legal secretaries paid a much lower salary than the fee-earning lawyers who have the ability to progress into partnership (at which point, they are then technically excluded from the legislation, due to no longer being considered an employee.) 

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When law firms took a brave step and started to include partners in their calculations (complex, but possible - see our partner pay whitepaper here) the gap widened further. The picture of lack of progression of women into partnership exacerbating the lack of senior representation of women in law. The huge variation in pay between legal secretaries and top lawyers creates a big division and therefore a large headline figure (in both gender pay and bonus pay gap calculations). When we speak of this headline figure however, we must remember that we are dealing with the ‘unadjusted gap’ for a firm. 

The ‘unadjusted’ pay gap does not take into account years of service, experience or educational level for example (it is not adjusted to ‘explain’ causes of disparity in any way) but is incredibly useful for painting a broader picture of inequalities. The gender pay gap regulations have been incredible for painting this broader picture and revealing the lack of representation of women in the most senior (and therefore highest paying) positions, just as they often show the lack of men in lower paid roles). 

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What I would like, in my work with Gapsquare as VP and a person often working directly with legal sector HR teams and their clients, is for firms to have a clearer idea of the metrics that are needed to help them achieve progress in closing the pay gap.  So, here are what are, for me, the most important metrics for you to be looking at today: 


Top HR Metrics Firms Should Know

1 - Representation across quartiles, or even deciles

This is part of the UK gender pay gap reporting legislation, but often when law firms bring partner data into their combined firm figures, they will just report on the mean or median, not the quartiles. Looking to see movement of women into the higher quartiles across the reporting periods is how you show signs that progression is not just possible, but that your diversity strategy is working.

Another missed opportunity is when law firms who do break all data down into quartiles only look at their combined figures. A more useful metric is to remove the business support staff (who have no opportunity to become partners) and look at the progression of lawyers separately to the business support staff across the quartiles and understand how this is changing over a time period. This will paint an incredibly accurate picture of progression for your employees as a whole as progression and promotion will work differently for legal and non-legal staff. 

 

2 - Understand gaps for fee earners and business support separately

If law firms start to look at their quartiles in more depth, then it makes logical sense to continue analysing your business in more granular detail. For fee earners & business support staff progression is different, opportunity is different, and experience (e.g. PQE) is different. It is useful to look at your firm-wide gap, but to get under the skin of what’s driving difference, is to look at these two groups separately, as different issues around recruitment, retention and progression will arise. Most of the law firms that have used Gapsquare have been analysing their fee earners and business support staff separately, and with three years worth of data, can start to see some really interesting insights into these distinct categories.

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3 - Lawyers want to know they are paid fairly, so release your gaps by job level

Gapsquare looks at adjusted gender gaps (that accounts for demographic data) as well as unadjusted gaps (e.g. your firm wide gap).  Associates, Senior Associates, Trainee Solicitors all want to know that they are being paid fairly for the work they do. Many already understand that their firm is going to have a wide gap as a whole, but want to see more transparency that they are being paid fairly for their level of experience and expertise. One leading company we have worked with communicated their pay strategy internally by reporting their pay structures in a grid-like table, showing pay differences that has adjustments for job level, PQE and tenure. This has transformed their culture, created an openness around pay, and increased employee satisfaction exponentially.

4 - Use analysis by age, tenure and job level to understand where progression slows or halts

Year three reporting is critical as firms are now getting enough data to understand progression. Looking at pay by age, tenure and job level allows firms to pinpoint exactly where in a career trajectory progression slows or halts. HR teams can then be more strategic in their approach to understanding how they progress these individuals to ensure that they are retained by the firm. It is this sort of analytics that becomes pivotal in understanding how pay, tenure, age and level impact retention of talent and makes gender pay gap analytics essential.

 

5 - Pay & Reward packages take different shapes for men & women - understand pay elements in relation to D&I

One firm that I worked with looked at their pension gap. They noticed that senior men were contributing very heavily into their pensions and that (unsurprisingly), women were not. They also looked at the impact different reward elements made towards their gaps (for both firm-wide and job level wide). Understanding the impact of reward was enlightening for them - they could rethink their comms and internal marketing strategies, they could rethink the way they compensate and reward staff and they could understand the drivers that different groups of employees had when it came to pay and reward. This has had a knock on (positive) impact on how they recruit and retain staff.

 

In Conclusion

It is true to say that the current methodology of calculating the UK gender pay gap, has been useful to expose the unequal representation of men and women across a firm, but that there are some wider useful metrics moving forward that show that a firm is making progress. It is my belief that achieving real progress in reducing the gender pay gap for law firms, will only be possible when there is an increase in women achieving partnership and an increase in the number of men taking up some of the business services positions in law firms (e.g. legal secretaries).

By breaking down your data and using the metrics above you can ensure that your work on closing the gap is effective and communicated effectively.  None of this work will happen overnight. It requires long term strategic and structural change whereby law firms have to think through how best to achieve a more inclusive workplace with flexible working, part-time leadership roles and a change of culture. Progress ultimately necessitates an exceptional ability to paint the picture of your organisation, in all its various colours and shades. It requires that this vision and understanding of where you are in terms of fair pay, brings about faith that the GPG regulations and your work to do something about your figures will ultimately mean that being part of your teams is only going to get better.

Data, when used properly can be a genuinely revelatory. If you would like to learn more about where you are in terms of gender pay gap legislation, including analysis of the metrics above, please get in touch to learn more. You can reach me at sian.webb@gapsquare.com

 

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