Transparency is key to closing the gender pay gap

Post author image. Charlotte Woodworth
Gender Director, Charlotte Woodworth, explains why more transparency around pay is key to closing the gender pay gap.
Charlotte Woodworth smiling

Are you a woman? If so, chances are you’re earning less than most of the men you know.

The gender pay gap is one of the most stubborn, entrenched inequalities at work. Many women spend a lifetime earning less than men. This has knock on effects to their financial security while working and when retired, their life choices, around everything from food to housing, and most gravely, their basic safety.

There are myriad root causes:

  • ‘Occupational segregation’, women tend to work in fields that are lower paid.
  • Inflexible ideas about where and when work is done, making it difficult for women to combine well-paid work with looking after children and other dependants (responsibilities which fall disproportionately on women’s shoulders).
  • Outright discrimination, which can see women working in roles being paid less than men doing similarly skilled work. This last one is called unequal pay and is illegal but, as recent news stories have shown, still happening.

But discretion around money, particularly salaries, is key. Organisations with hazy, vague or deliberately secretive attitudes to talking about cash – what different roles are paid, and how those figures have been arrived at – are more likely to experience gender pay gaps1. When it comes to money, a lack of transparency is known to impact not just on the gender pay gap, it also can lead to other under-represented groups experiencing unfair pay differences. To help address this Business in the Community’s (BITC) has launched its Gender Pay Gap Reporting Dashboard, a new tool which allows you to easily track the UK gender pay gap, as well as across sectors and by employer.

Why does transparency matter to pay gaps?

Managers, and other decision makers’ capacity to make robust and unbiased decisions about salaries and what to pay different individuals performing them, depends on a clear and consistent application of organisational policies around grading different roles and assessing individual performance. 

Poor processes around setting pay, for example, a variable approach to reviewing performance, makes decision makers more vulnerable to their own unconscious bias and cultural perceptions. This could involve rewarding certain behaviours that are not actually linked to whether someone is doing a job well, or perceiving certain jobs, perhaps those that involve caring or that are seen as ‘women’s work’ in some way, as of less value. This is known to disadvantage certain groups more than others.

A patchy or vague picture when it comes to organisational pay and processes can impact not just individual managers’ decisions, but also the wider organisation’s ability to spot and address unwelcome pay patterns. Failure to track and interrogate pay data and apply a gender lens, as well as that for other characteristics, for example ethnicity, can make it nigh on impossible for an employer to spot problems and take action to fix them.

Perhaps most gallingly, opaque or unclear approaches can impact an individual’s ability to make sure they are being paid fairly. If you don’t know what the salary for the role is how can you ensure you start off at the right level? If you’re not aware of what colleagues doing similar roles are paid, even just through understanding your organisation’s broad pay grade structure, how can you sense check you aren’t missing out?

How can we fix the gender pay gap?

Many employers are taking a wide range of actions to address their pay gaps, but here at BITC we know creating a more open culture around pay, ensuring a more consistent and robust approach to setting salaries, is an area many struggle with. We recommend organisations:

  • default to transparency around pay wherever possible, for example sharing pay package details while recruiting, including as much detail as possible in annual reports
  • develop a clear salary framework and use salary bandings. This can help provide consistency and fairness 
  • carry out regular gender and equal pay audits, including consideration of whether roles of similar skill are being paid differently, and assessing any hourly discrepancy between the salaries paid to part time and full time workers
  • ensure decision-maker bias is mitigated, for example, by training managers in unconscious bias, particularly ahead of any recruitment or salary reviews
  • ensure wider oversight of ‘localised’ choices, for example, by introducing an organisation-wide dashboard to monitor pay rises and promotions by gender and ethnicity
  • analyse and share information on pay ratios, gender pay gaps, ethnicity pay gaps, internally and where possible externally. Develop gender action plans, detailing clear, targeted measures to tackle your gender pay gap.

But we don’t think this is just on employers, the government must act too. There are a range of steps BITC would like to see introduced. Most relevant to transparency is an expansion of gender pay reporting and the introduction of mandatory ethnicity pay gap reporting.

Gender pay gap reporting has proved vital in opening up debate in particular industries and particular companies. When the legal requirement to report was lifted, as happened in 2020, we saw a dramatic drop in companies analysing and publishing their pay gap data2. But research has highlighted how ‘light touch’ the UK regime is. We want to see gender pay reporting requirements expanded to include smaller employers from a 250 headcount to 100. Government should also require that employers develop clear action plans to tackle their gender pay gaps, including time bound targets. This is only part of the picture however, with mandatory ethnicity pay gap reporting needed to demonstrate and prompt action as to where bias and disparities continue to exist in our place of work.

Next steps

If you would like more help on gender or ethnicity pay gap reporting, consider one of our bespoke advisory workshops. If you are a BITC member contact your relationship manager to discuss this further. Not sure who your relationship manager is?

If you are not a BITC member talk to us to learn how membership can help you create a more equal workplace.

WE CAN TAKE YOU FURTHER ON YOUR RESPONSIBLE BUSINESS JOURNEY

References

  1. Michael Baker, Yosh Halberstam, Kory Kroft, Alexandre Mas & Derek Messacar (2019) Pay Transparency and the Gender Gap, National Bureau of Economic Research.
  2. Ashleigh Webber (2020) Just half of employers publish 2018-19 gender pay gap, Personnel Today, 29 May 2020.