It's not about the percentage...
I’ve got a thing about the gender pay gap.
Every year in April the gender pay gap figures come out and there’s the usual flurry of media coverage about whether they are good or bad, getting better or worse. This year the headline figure was 13.18%.
I confess, I stared at that figure for a while and hadn’t really got a clue what it meant. OK, it’s a fraction better than last year so that’s a good thing, right? And if I told you that the figure five years ago was 14.34% would you be encouraged or despondent?
If I am confused, I can’t help but feel that a lot of other people will be scratching their heads too. So let me see if I can do a little unravelling.
It seems to me that there are three key questions here:
- What are we measuring?
- How are we measuring it?
- Why it matters?
What are we measuring?
What we’re not measuring is equal pay. Equal pay is the right for men and women to be paid the same for work of equal value. It’s been protected by legislation since 1970.
The gender pay gap is the difference between the average earnings of all men and all women across a workforce. It’s a measure across all jobs in the UK, not of the difference in pay between men and women for doing the same job. Employers with 250+ employees are encouraged to report this figure every year, published one year in arrears.
How are we measuring it?
This is where it gets complicated. The reporting requirements include both mean and median gender pay gaps, bonus gender pay gaps, and the proportion of men and women in each quartile pay band. I can sense I’ve lost you already, but bear with me because I think this is important.
I asked one of the country’s leading experts, Anthony Horrigan, the CEO and Founder of Spktral, a company which specialises in gender pay reporting. He told me that the ONS has been tracking gender pay since 1997 via the survey called the Annual Survey of hours and earnings (ASHE), which takes a random sample of 1% of all employees in the UK’s (PAYE). The ONS deals with large volumes of data across geography, sector and population so its findings are statistically robust. In 2017 the government, in an attempt to encourage UK employers to stamp out the inherent biases against women in the workplace, introduced Gender Pay Gap legislation.
But they based the legislation on the ONS methodology. And because companies don’t have the same volume of data, even small fluctuations of people leaving or pay rises awarded will have a distorting impact on their gender pay gap reporting. Another mistake was to make reporting voluntary. As Anthony told me, “Sadly too many companies are paying lip service to it and making erroneous calculations, assumptions and misinterpreting their data!”
Pay quartiles are the key.
The Gender Pay Gap asks companies to report on their gender pay gap % but also their pay quartiles. The media have latched on each year to just reporting on the % shift. When the far more telling figure would be an organisation’s pay quartiles.
Simply put; a company needs to rank its employees, men and women from the highest to the lowest paid, then split this list into quartiles. This will show the distribution of wealth between men and women in each quartile and enable companies to spot the imbalances in their employee structure up and down the length of the company. Companies can then ‘mind that gap’ so that they can set targets and get it to a place that is right for their organisation and sector.
This year, the data shows that employers generally have achieved a slight overall reduction in gender pay gaps, with small improvements in the proportion of women filling the senior and best-paid roles. Over 53% of employers saw an increase in the proportion of women in the highest paid (upper) quartile.
Interestingly, there is also no scientific evidence to suggest that the Gender Pay Gap is closing due to legislation. Instead the evidence shows that the pay gap is naturally reducing as companies (thank goodness) are waking up and behaving more responsibly and paying their female employees the same as their male counterparts.
So why does it matter?
It’s important for companies to take stock of how they attract, retain, and promote women in their organization – and make sure they are being remunerated in line both with their male counterparts and with the value of the work. For employers, reporting their Gender Pay Gap correctly is not only the right thing to do, it is also a fabulous talent attraction and retention strategy so should be a no brainer!
Take action to close your gender pay gap
Here are some practical actions companies can take:
1. Analyse and share information on pay ratios and gender pay gaps, internally and where possible externally. Don’t just file a page of meaningless percentages!
2. Be transparent around pay, develop a clear salary framework and use salary bandings.
3. Develop gender action plans detailing clear, targeted measures to tackle your gender pay gap. Share those plans and get the endorsement and support of your entire organisation.
4. 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.
Celebrating the changemakers
This week’s shout out goes to MAPP, Glenmorangie and Lloyd's of London who all report their Gender Pay Gap incredibly well.
And finally, don’t leave your reporting until March 2024. To report correctly you need to do it now. If you want help, then I can’t recommend Anthony Horrigan and his team more highly.
And remember, mind the gap!
My me time
- I have finally finished reading Lessons in Chemistry by Bonnie Garmus, brilliantly written and a clever take on how the inherent bias in our society and ‘some men’ have held back women’s careers.
- I have started to read The Nowhere Office: reinventing work and the workplace for the future by Julia Hobsbawm as last week I went to an inspiring talk she gave at the The Quorum Network founded and run by Janine Stow.
- For a bit of light relief, I am watching White Lotus on BBC iPlayer.
- For the foodies out there, I am a massive fan of Ottolenghi and on Saturday night I cooked two of my all-time favourite dishes from The Ottolenghi Cookbook; marinated lamb with coriander and honey p104 and Danielle’s sweet potato gratin p68 truly delicious and super easy to do!
Who am I?
I am Juliet Turnbull, the founder of 2to3days, the company I set up because I believe that women in the 21st century have a fundamental right to reach their full potential at work. I believe the UK plc needs a female focused talent marketplace