The gender pay gap

It's not the numbers, it's what we are going to do about them.

IR Magazine
12 March 2018

Written by Karen Almeida, Head of Reporting.

The gender pay gap: it's not the numbers, its what we are going to do about them.

The debate surrounding the publication of the UK's gender pay gap figures was always going to be heated. But let's face it, the numbers were hardly going come as a surprise, were they?

A cursory glance at the management teams of most large organisations shows that men are still more heavily represented than women. And for public companies at least, remuneration reports have brought transparency to executive pay: there's no great mystique about business leaders' salaries and bonuses. The 'mix effect' means that a relatively small percentage of highly paid senior managers (whether predominantly male or female) will skew the overall numbers because of the quantum of executive pay, even if the pay averages of other employees are relatively balanced.

Granted, we haven't had clear sight of average pay rates below the executive layer in every company until now, but industry pay surveys and recruitment consultants make it easy enough to find the going rate of sector pay if people choose to look for it.

The numbers are only part of the story

Yes, pay gaps do exist. The government's decision to force reporting on pay data was a deliberate move to shame organisations into doing more to reduce pay inequality. But the numbers alone are only part of the story - the lag indicator. So the noisy indignation of some commentators in response to those numbers is rather missing the point, especially when, as in a recent Guardian article, easyJet was accused of "shrugging off" its pay gap when it attempted to explain the causes and its initiative to get more women into better paid jobs as pilots.

Explaining the numbers properly is exactly what does need to happen: a credible explanation, based on a robust analysis of the real causes of an organisation's pay gap, is the first step to convincing people that companies understand what's really going and are going to do something meaningful to fix it.

What's really holding women's pay back?

The truth is that, often, the issues that contribute to gender pay differentials are complex, interrelated and linked to the choices women make, willingly or unwillingly.

In industries that have until recently been seen as predominantly 'male', such as engineering, infrastructure and energy, it will take time for efforts to attract women and move them through the ranks to have any meaningful impact. There need to be significant numbers of women moving up to senior levels for the pay gap to be less skewed by the salaries and bonuses of men who have been working their way up the tree for years. That's a pipeline change that starts with girls' 'A' level options and career choices.

A 'long hours' culture in some industries and businesses may discourage some working mothers (who still tend to take on the lion's share of childcare) from applying for more senior roles, especially if the companies they work for are lukewarm about flexible working.

Women can be reluctant to switch companies in search of more senior roles if their track-record with an organisation has allowed them to negotiate flexible working arrangements that they don't want to jeopardise by moving elsewhere. But it isn't all down to women. Women and men (and the organisations they work for) need to be open to fathers making flexible working choices so it isn't always a mother's working hours, salaries and promotion prospects that are reduced.

The Modern Families Index 2017 contains some interesting insights which suggest that male attitudes, among younger men at least, are starting to shift: nearly 50% of men aged between 16 and 34 said they were prepared to take a pay cut to work fewer hours, almost twice as many as those aged 46+. PwC's Women in work index also points out that by focusing on policy levers that provide better social support to women and families, governments could do more to encourage women's presence in the workplace.

Yet it's not only motherhood that influences women's choices. When a large professional services firm investigated the reasons why women were leaving in greater numbers than men, even before having children, their female leavers talked about wanting to travel and try different types of work. Perhaps they see more value in broader life experiences than in climbing the partnership ladder with its associated salary hikes.

For women who do choose to take a more linear career path, though, there's often a shortage of senior female role models. This, in businesses with a 'male' management culture, where hiring decisions are made over a beer, sends a message that women need not bother applying, even if they are well-qualified for a job. And even when women are appointed to the most senior positions, as the furore over the BBC's pay gap disclosures showed, their salaries aren't always at the top of the pay band for the jobs they are doing.

What needs to happen?

These things might take more effort and imagination to fix than just working out the mean and median pay numbers and publishing them in accordance with the legislation. But that doesn't mean it can't be done. Closing the gap needs to move higher up businesses' 'to do' lists. It needs cultural change (within organisations and more widely in society), and it needs a plan.

Less of the vague aspiration and more action is what will persuade women that organisations are serious about tackling the gender pay gap. Whether it's easyJet's target that 20% of new entrant pilots should be female by 2020, or Lloyds Banking Group's action plan to have 40% of senior roles held by women by 2020, businesses that can articulate a commitment to a credible plan to measure and deliver change are the ones that will attract and keep female talent. And for those businesses, that could lead to real competitive advantage.

This story was first published in IR Magazine: https://www.irmagazine.com/articles/reporting/29499/industry-view-gender-pay-gap-its-about-taking-action