Key Steps to Tackling the Perpetual Equal Pay Gap Once and for All

Blog - Helen Wells, Director, Opportunity Now

This week two pieces of research highlighting the significant gender pay gap in the UK were released, coinciding with Equal Pay Day UK on 7 November. Research from the Chartered Management Institute (CMI) revealed major disparities in the salaries of female and male executives in the UK, and Futuretrack research revealed a distinct pay gap between male and female graduates with similar qualifications, work experience and roles.

The average female executive suffers a lifetime earnings gap of £423,390 when compared to a male worker with an identical career path. When it comes to annual rewards, the average bonus for female executives is less than half the amount of male executives. This gap worsens at director level – 50% of male directors received a bonus compared to just 35% of female directors. The CMI findings also show that women executives or directors are more likely to be made redundant than male equivalents. This indicates that unequal pay is not just about childcare, as women are reaching the top levels. Unfortunately, they are not being paid or progressed against the same benchmark as their male counterparts.

Futuretrack (which is undertaking an ongoing and comprehensive survey of UK student career development) found that at graduate level, male graduates earn on average between £24,000 and £26,000 whilst female graduates earn between £21,000 and £23,999. The subject matter may contribute to this difference, but the researchers note that “male graduates with similar qualifications, experience and in similar jobs earn more than females at the outset of their careers.”

In 2012, a person’s gender should not have such a significant impact on their salary. Tackling the ongoing equal pay gap in the UK is a continual challenge.

Opportunity Now has always worked with employers to help them to understand the many and complex issues that contribute to the pay gap. From occupational segregation, length of work experience and the number of interruptions to women’s careers, to organisational and behavioural factors within workplaces that perpetuate an imbalance, all of these are factors that employers need to be mindful of.

Traditional methods of assessing talent has led to unconscious mirror-imaging in appointment and promotions processes, whereby employees who exert similar behaviours and display similar skills sets to their superiors are most likely to flourish. This, along with the absence of an analytical job evaluation process, lack of training on equal pay issues for those involved in pay decisions, or lack of clarity on pay at entry, pay progression and pay protection all contribute to a gender pay gap. Having more than one pay scale across an organisation and the indiscriminate nature of bonuses also contribute to disparity.
As a result of their findings, the CMI wants the government to “demand more transparency on pay.” Opportunity Now supports the Lord Davies review and the Think Act Report – both of which actively encourage organisations to publically set targets for women on boards and to be transparent on their gender metrics, respectively.  Early analysis from our Benchmark 2012 indicates that 62% of organisations have carried out pay audits, and these are the organisations that tend to have higher rates of senior women.
For those organisations committed to tackling the equal pay gap, here are four steps to consider addressing in order to start making positive changes:

Measure workforce data by gender:

  • This is essential. Preferably done vertically, horizontally, by cross-cutting diversity strands and by working patterns.
  • Leading organisations frequently measure the following with a gender lens: recruitment and selection, promotion and appraisal, learning and development, staff turnover, exit interview, bullying and harassment, pay and reward, change management processes, product and service design, marketing, consumer profile, consumer satisfaction, procurement and purchasing, and community investment.

Unconscious bias:

  • Roll out effective unconscious bias training to all staff, and it should be compulsory for those involved in assessing employee talent in the areas of recruitment, pay, promotion and progression.
  • PwC, the winner of the Opportunity Now Inclusive Culture Award 2012, made unconscious bias training mandatory for all employees because its board felt it was so important
  • Apply transparency and best practice to pay and promotion:
  • Appraisal mechanisms which are linked to pay, promotion or progress should be transparent and monitored for differential gender impact
  • Use your workforce metrics to gather evidence on where women and men are progressing or experience greatest pay gaps, and test for bias. For an example, an appraisal system where more men are regularly assessed more highly should be reviewed.
  • Redesign talent management systems to reduce opportunities for perpetuating inequalities
  • Closely monitor the pay and progression of employer on agile/ flexible working to ensure their working arrangements are not hindering progression

Take action:

  • Use the workforce data to identify the areas that need addressing
  • Walk the talk: all board and senior management teams to openly undergo unconscious bias training and to actively support any initiatives. This will support organisational and behavioural change.

At Opportunity Now, we ask our members to commit to:

  • Conducting an equal pay audit by 2014 
  • Putting gender metrics in the public domain by 2016
  • Adopting equal pay best practice, not just as a workplace entitlement, but as a mechanism to create a fairer and more equal society. Such best practice would include corrective and preventative action and robust pay processes such as job evaluation, transparent bonus systems and training for those involved in pay decisions

This is just a very brief introduction to kick start your thinking on how to tackle organisational pay gap. and there is more detailed and expert advice available .
This year we have been running equal pay workshops in collaboration with Eversheds and equal pay expert, Sheila Wild who can be viewed in 3 Q&A sessions in the following videos.