If you run an organisation in the public or private sector that has more than 250 employees then you will know that you need to report your gender pay gap statistics each year. The first deadline for submission was March/April 2018 and at the time just over 10,500 organisations qualified.
This article will look at the gender pay gap reporting (GPGR) challenges that businesses face including calculating figures, return on effort etc.
Intention of the gender pay gap reporting legislation
The ACAS guide to managing gender pay reporting explains that “The gender pay gap shows the difference between the average (mean or median) earnings of men and women. This is expressed as a percentage of men’s earnings e.g. women earn 15% less than men. Used to its full potential, gender pay gap reporting is a valuable tool for assessing levels of equality in the workplace, female and male participation, and how effectively talent is being maximised.”
Whilst the legislation currently only requires businesses to report a set of figures and summary explanation, the spirit of Gender Pay Gap Reporting is to allow leaders of organisations to check whether they have a suitably diverse working environment that reward everyone equally.
But to follow the spirit of the legislation businesses need to not only collate the data and calculate the results but also have leaders that can analyse and interpret the information and formulate a suitable action plan.
Gender Pay Gap Reporting Challenges
In August 2018 parliament published a ‘lessons learnt’ report reviewing the process and the results of gender pay gap reporting. They found that:
- Businesses found it difficult to generate the figures and some required external support
- Some complexities around bonuses and allowances were not catered for in the supporting guidance notes making it unclear as to how these figures should be treated
- Employers have to report by ‘business unit’ which means some companies have to submit multiple reports for group companies which can take more time/resource.
- Challenges arose around how to calculate for those on variable hours
- Validating the data was difficult and accuracy of the data was questioned
- The timing of the reporting deadlines put it in the busiest reporting period for businesses adding to the pressure on resources involved in generating the report (which often involves finance teams also responsible for year end/tax processes).
- Some businesses struggled to understand the value of the process and how to get a return on the effort involved. As such they did not devote enough resource to it.
Calculating the figures
Even if you are able to extract the raw data, completing the calculations and checking their validity can be an issue.
In their report on gender pay gap the Financial times found a number of errors in the submitted data including:
- At least 38 companies reporting an exactly zero gender pay gap by both mean and median measures, which is statistically implausible given that the two statistics measure different things.
- One company reporting a mean gender pay gap of 106.4 per cent — implying that, for every £100 earned by a man, a woman would be “fined” £6.40.
- Two companies reporting that they employ no women at all, despite the person reporting one of the companies’ data being a woman.
Return on Effort
The legislation is mandatory and the findings of the parliamentary review are likely to strengthen the powers to enforce and enhance the requirements. There is talk of adding ethnicity and disability information to the reported figures in the future.
So if you have to go to all this effort anyway then why not get some value from the information? The parliamentary review found that less than one third of organisations published any kind of explanation with their figures and only 5% had included an action plan to address any disparity. This is a clear missed opportunity.
Those not publishing any explanation are leaving it to the public and the media to create their own interpretation and in many cases based on the average figures this will be negative. Those businesses that do publish explanations and action plans not only demonstrate to the outside world that they are serious about creating a balanced working environment but also to their own employees.
At a time when employment is low and getting good quality skilled employees is becoming more and more competitive and expensive those businesses that show that they pay attention to their employees and workplace culture will prosper.
Need help gathering gender gap data?
If you would like more help to gather your data and turn it into valuable action plans and insights then contact our team at Business Intelligence and Strategy to find out more.