Gender pay gap reporting. Three years in - what's changed?

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By Innes Miller

25 Feb 2020

Three years in, limited progress has been made in reducing the gender pay gap. While it’s a complex issue that requires realism in the time it will take to resolve, only a small percentage of organisations recognise it as part of their overall business strategy, and how it adds value to their brand and business performance.

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With around five weeks to go until the reporting deadline for private and voluntary sector organisations, just over 10% of companies have submitted so far. We track the government submissions and this year companies are leaving it later to report. Is it falling down the list of priorities, or do concerns remain about the reputational risks of reporting early and being profiled by the media?

While too many organisations view gender pay gap reporting as a compliance exercise, we are seeing a growing number of companies using it to think more broadly about how it fits with their response to emerging themes in their external environment such as sustainability (of which equality, diversity and inclusion is a part) and the growing importance of environmental, social and governance (ESG) measures to key stakeholders. 

More stakeholders are taking note

We are speaking to more companies where their investors and clients are taking greater interest in their equality, diversity and inclusion strategy and performance as part of their decision-making criteria. In some sectors, being able to demonstrate commitment and leadership in this area is now a key criteria in the final selection process. 

So, what are some of the issues business leaders and management teams need to consider? The first is to understand what the issue means to stakeholders whether they be your current employees, prospective employees, customers, investors and the media. Gain an understanding of how it will feature in their future view of you and use this to inform your business strategy. 

Innes is the co-founder of Spktral, a technology company that helps organisations better understand and improve their equality, diversity and inclusion profile.

Adopt a strategic approach

Simply implementing a number of ‘initiatives’ is unlikely to deliver sustainable change. For example, unconscious bias training on its own has been proven not to deliver improvements. We see many organisations taking this approach where a number of initiatives are implemented but are not part of an overarching strategy.

There has to be a clear, consistent and measurable plan of action driven from the top covering all business units and functions that is integral to the organisation’s strategy, purpose and culture.

In addition to understanding what’s happening externally, you may also have to invest in an employee engagement programme to obtain the data and internal insights you need to inform your strategy. For example, the ethnicity profile of your employees. As part of this, careful consideration should be given to the questions you ask, and the messaging relating to why you are asking them. In the context of GDPR, think about the ‘quid-pro-quo’. To provide this data, what will you offer in return? Perhaps explain how by providing this data, the company will make improvements to the working environment to the benefit of all. 

Having defined your plan, think about targets, key performance indicators and how progress will be measured. Collecting and analysing the right data is key. Updates should be published to management and other key stakeholders. Also, think about how you can use what you publish to enhance your brand. Perhaps it merits a dedicated page on your website, with regular updates on the progress being made. 

Avoid the risks of purpose washing

Recognise that this is a complex issue that requires long term commitment. To deliver a sustainable approach, new ways of working may be required, and various policies and processes may have to be changed. Hiring women or diverse candidates into senior leadership positions will only be a short-term fix if everything else stays the same. If the structures are not in place to allow diverse talent to progress up through the organisation to senior positions, it is likely that the organisation will default back to its previous position and its culture will remain the same. This is in effect ‘purpose washing’ and may do the organisation more harm than good.

Leading organisations understand and embrace diversity. It forms a core part of their values, purpose and culture. It’s difficult to deliver innovation without it. It’s also about more than just HR. Marketing should be involved to help define and deliver key messages for internal and external stakeholders.

The CFO or finance director may like to hear how it will enhance the value of the company at a time when soft metrics are becoming more important than hard ones. If your company is listed, your story can be used positively with investors. The same can be said for sales or client engagement teams who can use it to win new business. This is happening increasingly in legal and asset management sectors.

Only by adopting a strategic approach where equality, diversity and inclusion are central to the overall strategy of your organisation will you begin to see meaningful progress being made on issues such as the gender pay gap. But it is complex and requires a consistent, concerted effort. 

Innes is the co-founder of Spktral, a technology company that helps organisations better understand and improve their equality, diversity and inclusion profile.

A note from Julia Nickless, Director at Connor:

Building on what Innes outlines, gender pay gap reporting has been an important way of putting a spotlight and ‘data lens’ on a longstanding set of issues that need to change. It’s the richness that sits underneath, around and within the basic stats, gathered in a clean and clear way, and interpreted by an experienced and unbiased set of eyes, that really gives it power and informs powerful decisions and action.

It’s about getting to the truth, as opposed to ticking a box or reading the bits we WANT or EXPECT to see. This is when it can inform not only crucial policies but also drive collective and individual choice and commitment. In our work supporting women in leadership and new parents in the workplace, what we see is that the policy creates the foundation. But, this in itself does not change a thing if mindset, behaviour and leadership does not change alongside it, creating a whole new set of conversations and experiences. Ask yourself, what will turn your organisation’s intellectual understanding of the gender pay gap issue to a commitment at a very personal, individual level to changing ways of working?

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