Consultants were filmed by undercover reporters who pretended to represent a fictitious cleaning company with 264 employees. Their recommendations ranged from options to split a company in two; reporting details of directors' pay as dividends not wages if they are also the owners; all the way to making some employees redundant.
While some employers might be interested in these short term measures, long term they will only have a negative impact. The costs of the consultants, combined with the costs of the recommended measures and having to maintain complex new structures going forward cannot be cheap. Ultimately employees will be more likely to question these measures and what they are hiding than the gender pay gap itself.
Instead, we’d like to provide an alternative list of loopholes. The kind of loopholes that make gender pay gap reporting regulations into an opportunity to become a fair employer that is more profitable, attracts and retains talent, and is transparent. The regulations in themselves are limited in what they show. Digging deeper into your data and making them a part of strategic growth to understand causes is where the magic happens.
Loophole 1. Data will show you why you have a gap
The key figures the government requires for reporting will give you a broad understanding of the average differences in basic and bonus pay. It will also provide you with an understanding if the gaps are there because of low proportion of women in higher paid roles and high proportion of women in lower paid roles.
Taking the regulations as an opportunity to drill down further into data can help unpick other issues that contribute to the pay gap. A few deep dives into data that can provide most insights are:
Pay data by occupation and job roles can help understand if there is a higher proportion of men in higher paid roles, not just in terms of management but also in term of occupations. Operational roles and roles in Science, Technology, Engineering and Maths have higher representation of men and a higher pay per hour. Support roles on the other hand see a higher proportion of women and pay less per hour. Slow career progression for women can also result in fewer women in higher level roles and therefore the Boardroom.
Pay data by age can highlight if the company is losing talent following career breaks to care for families. Data from Gapsquare shows that the gender pay gap starts increasing after the age of 30 and doubles for every decade a woman is in employment.
Pay data by grade level and/or job role can disperse any concerns that pay discrepancies are due to equal pay issues.
Loophole 2. Being transparent about the gap tells your teams you are an innovative and fair employer
Transparency drives performance. In 2014 academics Elena Belogolovsky and Peter Bamberger ran a research where they paid 280 people to complete a few rounds of a computer matching game. They fully disclosed the pay information to some people, while keeping it secret from others. The findings have shown that those who were kept in the dark performed worse than those who were informed about the practices.
Loophole 3. Addressing the gender pay gap will increase your profit
Research shows that diversity drives profit. Most recently Rocio Lorenzo and Martin Reeves of Boston Consultancy Group surveyed 1,700 companies across eight countries and various industry sectors and the benefits of a diverse workforce are multiple. Across the board, more diverse enterprises also came up as most innovative and had 19% higher innovation revenues and 9% higher EBIT margins.
These loopholes of what is limited gender pay gap regulations far outweigh the ones recommended by consultants in the Dispatches show. In terms of cost, they can also be cheaper both long and short term.
Gapsquare currently provides a free piece of software that will get users the basic numbers for reporting the gender pay gap. Companies can start there and see how data can help them become a fair employer that attracts top productive talent and has increased profits compared to others in the sector.