Gender Pay: the best defence is transparency

By Alastair Woods

With the final draft legislation out now, UK companies are preparing for a new disclosure regime that will put the spotlight on how well they are addressing deep-rooted gender disparities in the workplace.  From talking to our clients, we know that the data gathering will present a headache – it won’t all be in one place and will need analysis. 

But that is just the start.  From our perspective, companies will then need to focus on two things: 

• The additional disclosure that is required to give context to the numbers
• The wider efforts underway that will shift the gap over time

On the former, we know that some headline numbers will make for unpleasant reading externally – especially we will see league tables of data based on industry sectors. Companies should think about whether the only message they want to give is simply the required numbers: as the best defence for organisations will be transparency. Being open about the issue, why it has arisen and sharing data points over and above the disclosure will help this.  We all know that much of the gap will be because of “demographics”.  For whatever reason, there are not enough females represented at senior levels and this has a knock-on effect.

While greater disclosure helps the reporting, the other issue is addressing the gaps over the long-term.  The UK pay gap has started to fall (from 19.2% to 18.1% in the past year - the biggest drop for a decade). The real challenge for companies is to address the root causes of gender pay and other workplace inequalities. This will mean tactical reward interventions such as:

• Targeting salary adjustments at those lower in the range rather than one size fits all
• Paying bonuses as absolute amounts rather than a percentage
• Reviewing recruitment processes and starting salaries which tend to be higher for male workers
• Ensuring performance management outcomes and processes are “gender blind”

And the final piece of the jigsaw is the fairness and equality agenda.  Companies will need to think about their culture and the wider diversity and inclusion agenda – from networks, return-to work benefits, talent programmes and role models.   

All in all, this presents a great opportunity for companies to use the disclosure to deliver a step-change.  It allows companies to address some issues that have been bubbling around for some time and reap the benefits, both culturally and financially, of a more inclusive and fairer workplace.