Though the UK’s gender pay gap is at its lowest since records began in 1997, British women are still, on average, paid just below 82 pence for every pound earned by the average man.
In an active bid to inspire organisations to bold action, new legislation introduced in April 2017 requires every business employing 250 or more workers to publish details of its gender pay gap.
As HR and business leaders seek to recognise the implications for their specific organisations and to share information with internal stakeholders, we highlight—as part of our everywoman gender pay gap toolkit, much of which is free to download—some of the common misconceptions surrounding the gender pay gap and the new, legally enforceable regulations.
MYTH 1: WE REGULARLY CONDUCT EQUAL PAY AUDITS, SO OUR REPORTING WILL SHOW WE DON’T HAVE A GENDER PAY GAP.
Though equal pay and the gender pay gap are frequently used as interchangeable terms, the two are separate issues. The former refers to compliance with the 2010 Equalities Act that states that men and women must be compensated equally for doing the same work or similar work or work of a similar value. The gender pay gap, on the other hand, expresses the percentage difference between the average salaries of men and women across your organisation. The current UK-wide gender pay gap is 18.1%.
Even if your equal pay audit has corrected any compensation issues within your business, you may still have a gender pay gap, if, for example, your organisation’s hierarchy has more men at the top and a predominance of women in junior positions.
MYTH 2: WE ARE A MALE-DOMINATED BUSINESS EMPLOYING A SMALL PERCENTAGE OF WOMEN, SO ANY GAP WE REPORT WILL BE MEANINGLESS.
The new regulations require that all businesses employing 250 or more staff report the following, regardless of the workforce’s gender balance:
- The mean and median averages of male and female salaries and bonuses;
- Proportions of men and women receiving bonus payments;
- Proportions of men and women working in each quartile of the pay structure.
This collection of data reveals a story, regardless of the size of your female population. For example, knowing that the lower quartile of your organisation is made up of 20% women, but that the middle tiers show a decline in female representation, invites further exploration of the talent pipeline and the measures that could be taken to elevate more women up through the hierarchy.
MYTH 3: COMPLYING WITH THE NEW REGULATION WILL BE COSTLY AND OFFER NO BUSINESS VALUE
The new legislation asks for a small amount of data that is most likely already held by your HR or financial departments. This can be uploaded onto a dedicated government website by anyone within your organisation. In many cases, addressing your gender pay gap may require attitude or cultural reform rather than costly measures. If, however, you do take the next step of investing in diversity and inclusivity initiatives designed to drive down the gender pay gap, there will likely be many business and financial rewards. Businesses that take steps to attract, retain, engage and advance more women may be making substantial savings.
Research by everywoman has shown that 43% of women are looking to leave their current employer—a fact that the Society for Human Resource Management estimates can quickly rack up recruitment and training costs to the tune of 75% of each outgoing employee’s salary (i.e. £33,740 for a manager earning £45,000). Other sources point to a reduction in costs based on eliminating the loss of productivity related to staff turnover.
Men are 40% more likely than women to be promoted in management roles. The combination of transparency and targets will help employers become more aware of their own glass pyramid and encourage them to do something about it. This is great for business because diverse teams are more productive and boost employee engagement.
Ann Francke, Chief Executive, Chartered Management Institute
But quite apart from eliminating unnecessary costs, a growing body of research shows that businesses with greater gender balance report higher employee engagement, and enjoy increased productivity, creativity, and, ultimately, bigger profits. FTSE 350 companies with male-only boards are, according to a study by Grant Thornton, foregoing potential profits amounting to a 3% increase in the UK’s gross domestic product.
For these reasons, organisations employing fewer than 250 staff might consider voluntarily uploading their gender pay gap reports, helping to cement their reputations as action-orientated supporters of women in business.
MYTH 4: The government will use This information to name and shame organisations with large gender pay gaps, creating PR disasters FOR MALE-DOMINATED FIRMS.
The new regulations have been put in place for two reasons. One—to create greater transparency around widely known issues surrounding the ‘leaky’ female talent pipeline. Two—to encourage organisations to take bold steps toward increasing diversity and inclusion in UK business in order to reduce the gender pay gap.
Publishing our gender pay gap has allowed us to understand the reasons for the gap and hold ourselves accountable to make changes. For example, we know that a sizeable part of our pay gap is a result of having fewer women in senior positions, so this is an area where we continue to focus our efforts. We’re also challenging our recruitment processes, making more senior jobs available on a flexible or part-time basis, and have introduced a return to work programme.
Laura Hinton, Executive Board Member and Head of People at PwC
When entering the numerical data required, organisations will have the option to also upload an action plan, such as this one created by everywoman partner FDM, which has already completed its 2017 report. In this, organisations can give context to their existing gender pay gap, demonstrate the action they intend to take, highlight any steps they have already taken to address the imbalance, and share the diversity and inclusion initiatives they will employ going forward. Rather than a PR disaster in waiting, this is an opportunity for organisations to get to grips with their talent pipeline issues, to formulate an action plan, and to share their commitment to diversity going forward in a dedicated and public forum, thereby limiting any damage to its reputation.
MYTH 5: MY ORGANISATION HAS MORE WOMEN THAN MEN IN LEADERSHIP POSITIONS; THEREFORE, WE DON’T HAVE A GENDER PAY GAP AND SHOULDN’T NEED TO REPORT.
The current gender pay gap of 18.1% expresses the difference between the average salaries of men and women. But it’s accepted that some organisations will have a gender pay gap that favours their female employees. This is normally expressed in minus figures.
Of the 251 professions listed under the Office of National Statistics’ industry pay gap calculator launched in December 2016, 47 have a pay gap in favour of women. These include graphic designers (-1%), occupational therapists (-5%) and probation officers (-25%).
Understanding this data is helpful in building a national picture of the current gender diversity landscape and so even those organisations with a ‘flipped’ gender pay gap are legally required to publish their results if they employ more than 250 individuals.
The information provided in this guide is correct at publication (June 2017). For the latest updates concerning gender pay gap reporting, visit the government page https://www.gov.uk/guidance/gender-pay-gap-reporting-overview.
The Organisation for Economic Co-operation and Development (OECD) shows a percentage decline of 8.2 in the average earnings of men and women in the UK since the turn of the millennium (down from 26.3% in 2000 to 18.1% according to the latest figures). See data.oecd.org/earnwage/gender-wage-gap.htm
Focus On The Pipeline: Engaging the full potential of female middle managers by Alexander Mann Solutions and everywoman (2012).