Gender Pay Gap Reporting & the Business Opportunity

 

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UK gender pay gap reporting comes into force from April 2017 and the stakes are high. But don’t be fooled, this is not just a numbers game. It’s not even about the difference between what men and women earn. It’s about embracing a smarter way of doing business.

It is over 40 years since the Equal Pay Act was introduced in the UK. Yet in 2016, on average women earned 13.9% less than men*. This means that, compared to their male colleagues, each year British women effectively stop earning from early November onwards (ironically entitled Equal Pay Day) and work for free for the rest of the year.

This data doesn’t prove that men and women are paid unequally for the same job (which is illegal in the UK). It actually reveals a deeper-rooted problem: men are significantly more likely than women to have senior, better-paid roles. In fact, research** shows male managers are 40% more likely than female managers to be promoted into higher roles. Career breaks to raise young families, cost of childcare, part-time working, inflexible working hours, limited encouragement of women to study certain subjects, a lack of development and access to training – the list of reasons is endless and complex.

A new era of corporate accountability

From April this year, employers of more than 250 people in the UK will have to capture average salaries of their male and female workforce, reporting from April 2018. Many corporates already have a sense of how they fare in relation to the six calculations they will be required to publish. With the British economy heavily driven by financial and professional services, energy companies and manufacturing, some of the UK’s largest (and highest profile) companies will be reporting a significant pay gap – and facing a major legal and reputation headache. Many are already considering how best to manage the bad news. Should they publish with the peer group to focus media on an industry-wide story, rather than pick off individual companies? Or allow bigger peers to report first and become the main target?

Companies should be wary of pigeon-holing this law as an HR, legal or PR issue. Ignore, for a moment, the business risk of potential lawsuits from disgruntled employees and the inevitable negative headlines relating to pay inequality. These are short-term, defensive considerations which miss a key point. Instead, consider the opportunity to structure and reward a diverse workforce in a way that reflects the company’s client base. Isn’t it possible that a more multi-cultural, socially diverse and gender balanced team could identify and then exploit new and unexplored revenue streams? We know that consumers respond well to ‘good’ companies but, teams which show true diversity have been proven to increase creativity, boost productivity and, in some quarters, increase market share. Besides the reputation brownie points, doesn’t this just make good business sense?

The role of communications

There is no doubt that the communications strategy needs to be well thought through – there is a critical role for communications teams to play here. But 2016 taught us that the world now processes information and forms opinions in ways that are not compatible with old-school corporate communications. In a social media first, post-truth, alternative facts era, a clumsy attempt to comply with this legislation and then spin the numbers will quickly be identified as a cynical PR management exercise. Seeing this as simply a requirement – rather than an opportunity – could be one of the worst business decisions companies could make in the next few months.

A new mindset

The gender pay gap is not the responsibility of any one organization to solve. The causes and symptoms are too difficult to isolate and the result is a tangle of cultural, political, economic and societal issues with no clear starting point. Yet, accessing a deep talent pool with the right skill sets and abilities is among the top concerns for CEOs and addresses a critical need for businesses to remain successful and sustainable in the long-term.

While solo efforts may lack lasting impact, history shows us there is immense power in working across barriers and silos. Silicon Valley is an excellent example of what can be achieved through collaboration. In Europe, the partnership between Vattenfall and Volvo developed the world’s first diesel hybrid car. Competitors Nestlé Waters and Danone are working together to find new plastic bottle solutions to mutually address one of the biggest challenges facing their industry.

Many companies will need to change their corporate mindset. Rather than seeing gender pay gap reporting as an isolated issue, finding the solution must become a priority. This means it has to be lead from the highest levels within organizations, from CEO and board level. But it will only become truly effective once this leadership filters through to internal culture and corporate DNA. Only then will companies reap the rewards by unlocking untapped value in a presently under-used and under-rewarded workforce.

While this will take some time to make an impact, these efforts need to start now and remain a priority for the long-term. Gender pay gap reporting is just the tip of the diversity iceberg and there are many challenges and inequalities in our society that will increasingly become part of the corporate agenda. By taking the initiative now, companies have a golden opportunity to make our world a much fairer, more respectful and successful place.

*According to the UK’s Office for National Statistics (ONS)

** Chartered Management Institute and XpertHR

Anna Davies

Anna Davies

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