Ethnicity pay gap reporting is gathering momentum. Pressure is mounting on the UK government, not only to bring back gender pay gap reporting legislation but to enforce ethnicity too. Although a response from the government is expected by the end of 2020, forward thinking organisations are choosing to act now and start preparing.
In the absence of guidance from the government, we are seeing confusion on the best approach to ethnicity pay gap reporting. We hope to provide some clarity to some of your ethnicity pay gap questions with answers from pay gap specialist Anthony Horrigan and diversity, inclusion and leadership coach Aduke Onafowokan.
Does the acronym BAME cause more harm than good?
Aduke: “Without proper education, maybe. People get really emotional about social categorisations, so you need to be careful and approach it with respect. BAME is an acronym, it’s easier to say than listing out all of the different cultural identities. There is no human being who would say “I’m BAME”, it doesn’t carry that level of meaning. So be mindful when and where you use it.”
Anthony: “From and ethnicity pay gap reporting perspective, simply comparing BAME to White could potentially cause more harm than good. Within BAME there are so many different ethnicities, all with their own unique stories. By simply measuring White against BAME you’re masking all of these individual stories inside the data. This could lead to masked pay gaps between different ethnicities and your White population can be vastly different. What you need is the best of both worlds; you need to have an overall picture alongside the ability to zoom in to one specific ethnicity, region or characteristic when checking for barriers.”
What role do Human Resources (HR) teams need to play in supporting organisations in making progress on their gender and ethnicity pay reporting?
Aduke: “Be really clear about roles and responsibilities. Not only who owns the data but who owns the process and change. This will depend on the set-up of your organisation. What does the diversity lens in your Human Resources team looks like? In some organisations, all of this diversity, gender and ethnicity pay gap work sits at HR level. In others it’s with the head of culture and talent. You need to ask yourself what the purpose of the HR function is, how does this impact the HR work that you already do and why is it relevant that you do this work.”
Anthony: “Don’t be afraid to ask for help. The gender pay gap legislation is only 10 pages long, but it is highly ambiguous in places. Senior leaders cannot expect HR, even if they have HR analytics embedded within them, to take this on and have all the answers.”
We currently collect ethnicity data at recruitment (on application form) and ask people to self-declare at that point. Do we need to ask again?
Aduke: “I think when you’re asking at that early stage you need to be mindful that you want people to be honest. I’ve heard of people who select another ethnicity, so they get through the interview process. To give more psychological safety around why you’re asking it’s best to give your Diversity and Inclusion purpose even at that early stage rather than just asking what ethnicity you identify as.”
Anthony: “I’ve got a bit of a data geek point on this! It’s all well and good to ask people at the point of application and as Aduke said, you need to clearly communicate your D&I purpose, so you increase response rate, but in the majority of organisations the ability to get the data is still really sketchy. Even in an organisation that has ethnicity data you might find that they only have good data for 60% of their workforce then 30% who have said they don’t want to tell you along with the final 10% they couldn’t get the data for. A key element that the government must insist on for effective ethnicity pay gap reporting should be the breakdown of these different elements because there is a big difference here between complete and incomplete data.
The goal is to get 100% of your employees to tell you what their ethnicity is because there is a culture in place that gives them confidence to give you their data. I would say you need to be constantly asking people. If you think about it from a GDPR point of view, people have the right to rescind your ability to keep that data. I think it’s got to be a lot more flexible and dynamic and you’ve got to give people the option, maybe through the use of technology.”
Do you think that there will be requirements for smaller organisations to conduct some form of reporting in the future? If not what do you think they could do voluntarily, other than ensuring equality in our policies, procedures, approaches etc.
Anthony: “That’s a very good question and again one of the things that made my statistical brain twitch was a couple of years ago when people said let’s extend gender pay gap reporting to companies who have 50 people or more. All of a sudden your metrics can be affected by small sample sizes and vast imbalances, like we showed with ethnicity – your percentages change drastically year on year. The thing that remains relevant is, where are you in the universe and are the people who work for you representative of what’s in that universe. Do people stay with you? Do a man and woman coming into your organisation have the same chances of getting to the top in 15 years or at what point do people spill out? Now look at ethnicity and ask the same questions. Be mindful as Aduke said of intersectionality. Is it different for a Black or Chinese woman or man?”
What role can senior leadership play in creating a diverse and inclusive culture?
Aduke: “I think the role that leadership play in anything is to 1. Listen – really try to understand what people are saying and give the platform for others to speak. It’s really important that an organisation who wants to get better at inclusion becomes a listening and learning organisation. Facilitate discussion about inclusion. 2. Take what they’ve heard and filter that through their leadership lens, doing things that reinforce the positives, being gatekeepers of the process. But the majority of their role is to listen about what they’re maybe getting wrong, adopt a growth mindset and promote psychological safety.”
How much time should we allow to prepare our gender and ethnicity reports?
Anthony: “Good question, it depends what you mean by doing the reports. The entire process from left to right is complex. If you are to perform this yourself, you need to get to grips with the legislation 100%. You need to know exactly where your data’s coming from. Do you have an integrated payroll system or are you outsourcing your payroll? Outsourcing is usually better because you have all the raw data you need. However, if you have to rely on an output report from your payroll system – how do you accurately write the report and how do you audit it? Only then can you extract your metrics, then collaborate to decide on messaging and finally write your report. That is hundreds of hours to do it right. That’s why in 2020, with three years of gender pay gap reporting behind them, there are still around 25-30% of employers making a range of mistakes – and these are intelligent people. You can’t underestimate how much time this is going to take. What you can do is look at it and say do we have the resources to do this well internally or should we outsource to ensure the process itself is robust and use our valuable time on making progress.”
When setting up a project team, how do you recruit and get the resources in place in a post COVID 19 world when senior management may be focused on other issues e.g. financial stability?
Anthony: “Senior management may be looking at other issues such as financial stability, but if you don’t get your talent right, and like Aduke said getting your future pipeline sorted, you might be looking at financial stability for the next year but in ten years’ time you’re going to be out of business anyway. You wouldn’t have evolved, you’re the dinosaur, you die off. Senior leadership have to see this as a long-term thing. That’s why it’s fundamental that this gets approval from the top and that the commitment trickles all the way down through an organisation. The whole point of D&I is that diverse thought, as long as it’s well led, will lead to better decisions. The McKinsey diversity series reports prove this. There are measured gains from doing this.”
How can spktral help organisations get this right?
It’s clear this is a complex area, whenever you come across something complex you’ve got to ask yourself one question: Do we have the internal resources to absolutely nail this and make sure this is going to work for us instead of creating a ball and chain around our necks. There’s nothing wrong with asking for help, if you get specialist help that will alleviate the headaches around this and allow you to focus on the results of what you get. Something we saw a lot with gender pay gap reporting was that companies would spend all their available time getting to a set of numbers and go phew we’ve done it! No…That’s just the start, you’ve now got the evidence to do the actual work. Spktral can calculate your metrics and produce the evidence for you, with the added independent assurance that your data is 100% correct – This leaves you free to focus on making changes in your organisation.
Have a question on pay gaps we didn’t answer? Please get in touch, we’d love to help you.