One issue that we often still hear about in the media is the Gender Pay Gap … but what does this really mean? How can it impact your business? And what can you do about it? Let’s take a look at how you can “mind the gap” in your organisation.
Gender Pay Gap vs Equal Pay
People often assume that the Gender Pay Gap is caused by men and women being offered, and accepting, different amounts of money for doing the same job. This is part of the issue; however, the Gender Pay Gap is more complex than this and represents a broader problem in organisations and society today. The Gender Pay Gap is a measurement of the difference between men and women’s average earnings across an Organisation as a whole, very different to Equal Pay legislation that focusses on individual pay – equal reward for comparable work, unless the difference can be objectively justified!
Why is it important to understand your Gender Pay Gap?
Even if you are below the 250+ employee threshold meaning you do not have a legal obligation to report your Gender Pay Gap, there are some sound reasons why it may make sense to consider the data now, especially given the sardine tight labour market we are in currently.
Recruitment site Indeed notes that 48% of girls (32% of boys) aged 16 to 18 would not work for a business with a gender pay gap.
Plus 55% of girls (34% of boys) actively research a prospective employer’s stance on the gender pay gap. And just for those of you who say you are not worried about younger workers making such decisions, further research shows that 41% of women (31% men) aged 19-65 would also look into possible wage discrepancies.
If you take the time to understand your own gender pay gap currently, then you have time to begin to assess what is needed and begin to close the gap before candidates start turning away from you.
A few facts…
From the Office for National Statistics (ONS), Indeed and other sources:
- The Gender Pay Gap for full-time workers sits at 11.9% this year, an increase from 10.6% last year.
- 8 out of 10 of the UK’s most popular job roles have a Gender Pay Gap in favour of men.
- As we noted above, 48% of girls aged 16 to 18 would rule out working for an organisation that has a Gender Pay Gap.
- 67% of women did not ask for a pay rise in 2020 compared to 37% of men. (Why not check out our unconscious bias/gender focus infographic to understand more about how women do not ask).
- The Gender Pay Gap is highest for the top 10% of earners. Women in this group earn 16.1% less than their male counterparts. For the bottom 10% of earners, the gap is considerably lower at 3.1%.
The research highlights that younger women are now facing more of a significant pay gap than in previous years. Studies on workplace pensions also show that women are at more risk of being financially underprepared for retirement.
What does this mean?
Ignore the issue to the detriment of your business! Everyone needs access to talent, it’s a very tight labour market and will be for some years to come.
We find candidates are now more commonly researching their potential employers. We have even heard about candidates searching on LinkedIn for Directors, Managers or those responsible for recruitment in the organisation they are applying to, in order to establish how diverse their connections are! Employees (or potential employees) are vastly more aware, connected, and proactive about inequality than ever before, and we can’t ignore this.
Equality and Diversity need to move to centre stage for those organisations that want to recruit the best talent.
What you can do…
Unfortunately, there is no magic wand to eradicate the gender pay gap. It will take collective and determined action, led from the top to achieve change.
We do, of course, have some ideas about what you might consider when planning for change:
Audit your pay and benefits
- Start by assessing your overall pay gap and then drill down to look at any pay gaps in specific areas such as amongst directors, other workers, line manager roles etc. You might find there are pockets of your business with no pay gap, whilst others have a large one. Look into what is causing these as it may be human error (often unconscious) or intervention, rather than anything to do with role or sector. Once you have your data you can begin to plan for change.
- Empower your staff through education – Teach them how they can influence pay decisions and how different people might take a different approach. Teach them how gender pay gaps can occur through no deliberate intention and show them how they can work with you to address this issue. Educate the whole team to recognise and understand their own biases so you can all work together to minimise the impact.
- Appoint diversity managers/diversity forces – A Diversity manager or task force can help reduce bias in the workplace. Raising the awareness, having someone with authority to challenge decisions and behaviours, regularly reviewing the data etc are all good ways to keep this in focus as you look to improve the ‘gap’.
- Manager assessment – With the intention of training and raising awareness rather than discipline, take a closer look at who is recruiting and promoting who across your business. Do you have anyone who never recruits candidates of a different gender, or ethnicity perhaps? Do you have someone who only ever recruits people just like them? Do you have a manager who has no female team leads or who assesses the potential of their team members on the basis of gender rather than any clear objective? Seek to educate and raise awareness rather than punish if you want to achieve change.
- Encourage recruiting managers to consider their biases, conscious or otherwise. If necessary, take time to educate your recruiting managers about potential biases. Do you have a manager who would take advantage of women who have been earning less than expected for the role you are offering, inviting them to join your business still on that lower wage? If so, you are perpetuating a situation that occurred long before she joined you, but that will now become your problem! Do you fall into the trap of assuming a woman is less capable for the role you interview her for just because she is more comfortable than you might be talking about the skills she still wants to develop? There are lots of biases that might apply at recruitment, these are just two of the more common ones. Ensure there is someone who can challenge thinking and decision making to minimise the impact of bias.
- Challenge accepted thinking – ‘Women just don’t apply for these kinds of jobs’, ‘No woman would want to work in such a male-dominated environment’, ‘Women aren’t great at spatial awareness so we’re unlikely to find any with skills for this role’ etc. An acceptance of the status quo is your worst enemy if you really want to tackle the gender pay gap. The world is changing, but are your recruitment managers attitudes and behaviours changing fast enough to keep pace with the world we now operate in?
- Encourage salary negotiation – There is evidence that women are less likely to negotiate their pay on first joining an organisation. The incremental effect of this if they stay with you for ten years or more can be huge. The reasons for not negotiating are complex. We can’t share our thinking as that’s a whole other article! But if you can take us on trust here, what we do advise is that you encourage all your graduates and other entrants to negotiate, this action alone will encourage more women to negotiate.
- Rethink how you shortlist for recruitment and promotions – Time to include more women in every single shortlist? This one seems simple enough but is often overlooked. Shortlists with just one woman do not increase the chance of women being selected for roles. Instead invite more women onto shortlists and the likelihood is, you may end up selecting more women for roles. If women are not applying for promotions, or dropping out at certain points in the process, it’s a good idea to establish why. Note: You will always have a gender pay gap if you don’t prioritise addressing gender imbalances in your senior positions, as senior level salaries can have a huge impact, so why not start with these roles for shortlists?
- If you do not have an annual pay review process, be very careful not to create a situation whereby only those who ask, get a pay uplift. It is well recorded that women in the UK often do not ask, instead they expect their manager to see and acknowledge the value they bring to the organisation and act accordingly. When managers do not see and act accordingly this can lead to women leaving due to feeling undervalued! Do your managers understand that this difference in behaviours around pay reviews is the cause behind many people’s pay falling behind that of their colleagues?
- Ensure that you do not fast track for promotion those who shout loudest or ask first. It’s very easily done. As we said before, women (not all women we recognise) often do not ask and frequently hesitate to ask for a promotion until they feel they are ready. In many cases, this can result in male colleagues being promoted a year or more ahead of their female colleagues. The impact on your gender pay gap thus gets ever greater.
- Throughout the organisation, make promotions, pay rises, and reward processes transparent. Transparency ensures that all employees have equal opportunity to progress. Having structured, skill-based interviews for both recruitment and promotions is key to reducing unconscious gender bias. You need to ensure you are open about the process, policies, and criteria for decision-making as a business. Employees are then clear about what is involved, and managers understand that their decision needs to be objective, and evidence based. Even small businesses can take little steps to increase transparency, little steps are better than nothing!
Make sure to do exit interviews. Ask the tough questions:
- Why are you leaving?
- Did your manager value your skills?
- Did you receive the promotions you believe you should have received?
- Are you paid fairly for the work you did?
- What could we do in the business in respect of culture that might have persuaded you to stay?
The more information you can gather, the better positioned you will be to make changes to begin to address our pay gap. Analyse your leavers, are there more leaving of a particular age, gender, ethnicity – what does the data tell you?
To wrap up…
In our view, no pay gap will be resolved without the whole team’s education and awareness, managers’ commitment and understanding and directors’ setting a clear strategy and being visible in their leadership on this issue. HR of course, in the background to organise, support, challenge and acknowledge successes. A holistic approach to a complex problem!
What’s stopping you from taking the first step today?
How we can support…
Thinking about training for your line managers D&I, Gender Intelligence, Unconscious Bias, GroupThink? Talk to us for some ideas … face-to-face, online, digital learning, we have lots of options for you.
Need to pluck out one or two dissenters in your ranks and address attitudes before taking next steps? We are good with hot potatoes so please do call us for advice.
Key competencies for today’s successful managers – ask us about our training and development programmes.
Need a helping hand or a sounding board? Here at Jaluch, we are always happy to operate on either a contract or pay as you go basis, your choice and no need to worry about any contracts that tie you in until retirement!