As we move towards gender pay gap reporting deadlines, there are still over 6,000 employers peaking over the precipice of the pay gap, yet to report and still struggling with how to tackle pay gap information – what can we learn from the story so far?
Currently in the midst of pay gap drama are organisations like the BBC, who, having gone beyond the regulations, revealed controversial data that it went on to neither immediately tackle or explain well to its teams or the media. Also in the news are EasyJet who discovered that lack of female pilots and unequal distribution of the genders across the pay quartiles make for a 51.7% pay pay gap. In the last few days we’ve also heard that Wellcome Trust have a pay gap of 30%. The gender pay gap regulations are leaving no stone unturned, no industry, sector or company is immune to the revelations of the pay gap data - but there is no need to panic ahead of the deadlines. We've outlined 6 steps to help you when reporting the gap that you can tackle as the deadline approaches.There have been positive stories too – especially for companies who have worked out how to communicate their pay gap, building up a narrative and a plan of action that saves them a lot of time and energy and tells their teams that they care. An example can be drawn from Virgin Money, whose response to a 32.5% pay gap was to set out its causes and outline their mission going forward:
“We are confident that men and women are paid equally for doing equivalent jobs across our business...Our aim is to achieve a 50:50 gender balance by 2020”.
In their report on the pay gap, they made clear that they were not facing equal pay issues, outlined how their pay gap has developed and showed that they would be tackling key causes of the gender pay gap within a set time period. Striking statistics, but a positive narrative.
We are not hearing as much in the news about Virgin Money's pay gap, or Phase Eight (64.8% mean pay gap), why? Because these companies are clear on the reason for the gap, they have the data they need to understand it and they make it clear that they will be taking action going forward.
So why the current fuss on gender pay gap reporting? The need to publish the pay gap stems from regulations that came into effect last April, with a deadline a mere six weeks from now.
Reporting the Gap:
Six Steps in Six Weeks
We have brought together a range of advice that the Gapsquare team has developed through supporting hundreds of companies through pay gap analysis and reporting. We believe that these six steps will take you through everything you need to know and help you to publish the gap.
1. Understand the UK gender pay gap regulations
The Gender Pay Gap Regulations, otherwise known as the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 came into force in the UK in April 2017. The regulations require all private and voluntary-sector employers with 250 or more employees to publish data on their gender pay gap by April 2018. Broadly similar rules apply in the public sector under the Equality Act 2010 (Specific Duties and Public Authorities) Regulations 2017.
What information do you need to report on?
The 6 key figures on which you will have to report are:
- Average gender pay gap as a mean average
- Average gender pay gap as a median average
- Average bonus gender pay gap as a mean average
- Average bonus gender pay gap as a median average
- Proportion of male and female employees receiving bonus payments
- Proportion of male and female employees by quartiles (ie. when divided into four groups ordered from lowest to highest pay).
As you can see, the calculations make use of two types of averages:
- Mean – an average which involves adding up all of the numbers and dividing the result by how many numbers were in the list.
- Median – an average which involves listing all of the numbers in numerical order. If there is an odd number of results, the median average is the middle number. If there is an even number of results, the median will be the mean of the two central numbers.
The information must be published on both the employer’s website and on the gender pay gap reporting government website. Please do read more about the gender pay gap explained on our website through the link below.
2. Equal pay VS gender pay - Know the Difference
As our partnerships manager, Sian Webb notes, we do not have to compare “like for like” roles when it comes to the gender pay gap. Comparing men and women's in the same or equivalent jobs is something you do when you're measuring equal pay– something that has been a legal requirement since the 1970 Equal Pay Act.
If a male colleague has the same job title, same pay grade, same experience but earns more than the female counterpart, then there could in fact be an Equal Pay claim and legal advice should be sought. The gender pay gap UK reporting requirements however, are not to do with Equal Pay. If you do discover potential equal pay issues, act quickly to put it right. Find out how to do an equal pay gap audit.
Gender pay gap analysis compares the overall company male average pay to the female average pay and are more likely to reflect the clustering of women in low paid, part time roles, occupational segregation as there are less women in roles that pay more, and general lack of women in leadership roles.
Please do read more about this through the button below:
3. Avoid the obvious mistakes
There have been a lot of mistakes made with companies working to tackle the gender pay gap, it's important to know that adhering to reporting guidelines requires much more than a single consultation session or handing over the data without reflecting on the results. There was an article written by the Financial Times listing a number of the companies who have published Publish improbable statistics - “1 in 20 companies who have submitted their gender pay gap data to the government have reported numbers that are statistically improbable and therefore almost certainly inaccurate.”
A number of companies reporting 0% pay gaps or numbers around this have since changed their numbers, an action that is not missed by staff or the media.
Another thing to note, is not to publish without explanation, communicate with your teams. To us answering the questions of 'what' the pay gap is is not enough to build trust with employees and help drive positive change. Analysing the gender pay gap is about much more – it is about working with employees to understand why the gap is there and how companies can engage with the issues and move forward.
You can find out more about communicating the pay gap by watching our free webinar.
4. Know the benefits of understanding your gender pay gap
For us it's surprising to see resistance in tackling the gender pay gap. Though it can be difficult uncovering areas where we must improve how we work, when we see the returns that closing the gap can create, we have to admit that we’re better up being pay gap savvy. Unfortunately, few understand why the changes might be beneficial to a company. As we see it there are three key benefits to tackling the gap, which you don't want to miss out on:
A. Improved chances of recruitment
A recent survey by HAYS stated that 62% of job seekers looking for employment care about equality and diversity. Companies that show that they are doing something about tackling their gender pay gap is attractive for hiring the best talent.
B. A positive company culture will support retention
Companies invest in staff. Creating a company culture that values their employees, by offering rewards and incentives that retain not just women, but men too, like flexible working, childcare facilities and mentoring schemes is beneficial in the long run, as the longer a talented employee stays in a company, the better their value.
C. There are proven financial benefits to gender diversity
- A recent McKinsey report, Diversity Matters says that gender diverse companies who place value on equality and diversity are 15% more likely to have financial returns above their respective national industry medians.
- Companies with the highest levels of gender and racial diversity have nearly 15 times more sales revenues than companies with the lowest levels of diversity; in fact, for every 1% increase in gender and racial diversity of sales team, there is up to 9% increase in sales revenues
- Eliminating the gender pay gap will not only benefit your company immediately, it has repeatedly been demonstrated that it has a positive impact on the economy as a whole: "if women participated in the British economy to the same degree as men, economic output would be 26 per cent, or £600bn a year, higher in 2025 than current estimates for that year."
5. Analysing the gap - Do it right (Step away from the excel spreadsheet)
In the past few years we have spoken to hundreds of companies gearing up to run their gender pay gap analysis, in line with new gender pay gap regulations. Many are still unprepared for the reporting requirements, and a staggering majority are planning on doing it in an Excel spreadsheet (!).
Larger companies with access to more sophisticated Business Intelligence tools are planning on turning to these very tools for analysis: Tableau, or Microsoft’s Power BI, and more specific HR related BI tools such as Conerstone on Demand, or Workday.
However, according to Gartner, the chance of a BI tool not meeting business objectives is as high as 70%. The reasons are two-fold.
One, you need to be skilled at maths and statistics in order to make the most of these tools. And even when you are - working through these tools can take up so much time and resources that businesses are having to prioritise what they analyse. In the context of the gender pay gap, this quickly becomes limited to reporting figures.
Second, current business needs require more than what BI alone can offer. The right member of staff will be able to derive analysis on the gender pay gap and why it is there from BI tools, but this will not necessarily help contextualise the diversity and inclusion implications of the data.
The solution? Artificial Intelligence.
We know that AI is currently being paraded as the end all be all solution to everything, but at the same time there is evidence that AI is creating an analysis movement where decision makers don’t have to struggle cross-analysing indicators and figuring out if they should be correlating specific variables.
In our experience, AI algorithms can be built, alongside a system of notifications, to make it easy for managers with any skills to get answers they need when they need them.
We know this because we are building such a system at Gapsquare . Our system can answer questions and put forward unprompted nudges and solutions based on the payroll and HR data it sees. As we do this, we can see that nothing compares to the level of pattern recognition and predictions that can come through AI.
Current uses of BI tools is limiting what companies can do with the gender pay gap data. AI is the way forward if we want to be able to use data to build in action plans that narrow the gap and make the most of our diverse world.
6. Tailor the Solution to Your Company
There's no one size fits all solution to the gender pay gap regulations or tackling the pay gap. Your choice of analysis tool, how you report and communicate the gap comes down to your understanding of your own company and how it works best.
Gender pay gap reporting guidance and support should always be tailored to your organisation –not a one off consultancy session or vague advice. It is important to tease out some of the core issues revealed by your data and use this to put together a plan of action. We recommend having a plan around communicating the pay gap and we have a free webinar that you can review that will guide you in this area.
The gender pay gap is a long term issue that needs to be tackled with long term goals in mind - don't allow yourself to be in a position where you have to rush pay gap analysis, use tools that are tailored to your company which allow you to streamline the process of pay gap analysis and avoid wasting time. Gapsquare has, for example, saved over 6,400 hours of staff time for its clients in the last year. It is undeniable that amidst all the news centred around equality and diversity issues, that it is essential that you have a monitoring system in place for analysing the pay gap and that your company tells the story of its gender pay gap. As the deadline draws closer, it's time to embrace the regulations and close the gap, for good.
Need support or advice on approaching the pay gap? Click the link below.
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