Gender Pay Gap Reporting – what’s the point?

It’s that time of year when Gender Pay Gap reporting is back in the headlines. So firstly, let’s set the scene. A recent report from the Women and Equalities parliamentary committee recommended the Government ‘reinstate’ gender pay gap reporting, despite them previously stating that the legal requirement to report was only suspended for the 2019/20 reporting year. 

This created much confusion for organisations, with the national press reporting that the deadline had been ‘cancelled’ or is ‘under review’.

After three weeks of chaotic headlines and campaigning, the Equality and Human Rights Commission (EHRC) confirmed that they would delay the enforcement of the legislation by six months. This means that enforcement action against employers who fail to submit their 2020/21 Gender pay gap report will not start until October 5th, 2021.

Gender Pay Gap Reporting

You don’t have a six month extension

The EHRC has recommended that you report as close to the deadline of April 4th, 2021 as you can.  We, along with leading equality campaigners, agree and encourage you to get your analysis done as soon as possible. Not only does this send a good message to your current and future talent, customers, investors and other important stakeholders, it will make your life easier in three key ways;

  1. The further away you get from the April 5th, 2020 snapshot date that this report is based on, the more difficult it’s going to be to remember important details about your circumstances at that point in time.
  2. From May 2021 (which is unbelievably only a couple of months away), you should have all the information you need to prepare your next gender pay gap report. Yes, we know it’s not due until 4th April 2022. But before moving it to the bottom of your to do list, consider our next point.
  3. You want to give yourself as much time as possible to analyse your figures and make changes in order to show any progress by the next snapshot date of April 5th, 2022. If your organisation leaves your analysis until the first quarter of 2022, you are doing yourself a disservice by potentially slowing down any progress on closing pay gaps.

The pandemic is having a disproportionate impact on women due to care responsibilities, job losses, furlough etc, so the spotlight is back on Gender Pay Gap reporting. With all this attention, we thought it was time to question the purpose and value of reporting your gender pay gap to the Government.

Gender Pay Gap Reporting 2021

So, what is the point of Gender Pay Gap reporting?

There is not much point if you just submit the required six figures to the Government and wait another year before you think about it again. All you will have is  a record of numbers that on the surface, tell you very little about the situation in your organisation. 

A worthwhile Gender Pay Gap report helps you uncover insights about the representation of your talent at different levels in the company and set action plans to address imbalances for your organisation. If performed correctly, pay gap analysis can be used as a business intelligence tool to help you manage your talent flows. If you’re a smaller organisation and don’t have access to a sophisticated personnel management system, this is a way for you to track the changing representation of various groups of employees across your pay range by gender, ethnicity, disability, etc.

At a time when teams are stretched, budgets are cut, and you’re short on time, pay gap analysis will quickly show you where your organisation needs ‘triage’ – where and how you should target your limited resources to make the biggest impact. 

This is about bottom-line performance and the long-term competitiveness of the organisation; it’s not just a box ticking compliance exercise. Pay gap analysis should be an integral part of your Diversity and Inclusion strategy.

Click here to learn how we help our clients prepare effectively ahead of the Gender Pay Gap reporting deadline.

Does the UK need to level up its Gender Pay Gap reporting?

Another hotly debated topic in the Gender Pay Gap reporting world at the moment is about lowering the threshold for mandatory Gender Pay Gap reporting. Numerous reports, including those from the Global Institute for Women’s Leadership and the UK Parliament Women and Equalities committee, claim the UK is unique in its ‘light-touch’ approach to Gender Pay Gap reporting.

One such apparent ‘light-touch’ is the employee threshold. The UK currently stipulates that organisations with 250 or more employees must submit reports, whereas the majority of other reporting Countries have thresholds closer to 50-100 employees. There is a very clear reason why the UK should remain at 250 and not reduce the threshold to 50 – and that is statistics. 

The majority of these other Countries ask for actual pay data to be submitted confidentially,so the authority can examine the organisation’s performance and use the raw data to aggregate across industries and regions. While some metrics may be made public it is rarely an actual pay gap percentage, but rather other indicators such as an index score (France).  

So why is a reporting threshold of 50 employees a bad idea under the current UK legislation?

  1. Organisations with these low employee headcounts will submit aggregated pay gap percentages – i.e., they will submit calculated pay gap percentages from their raw data without any statistical rigour applied to the numbers. Basically, a small change in a small sample can have a big effect on the result calculated.  This can lead to a big fluctuation from year to year and a misrepresentation of these smaller organisations when compared to the bigger ones.
  2. Considering the media and general public already concentrate on the pay gap percentage too much, this could lead to some very damaging coverage of smaller organisations.

In 2018 when parliament recommended inclusion in reporting should be reduced from 250 employees to 50, the Royal Statistical Society said this would be “irresponsible” and lead to the production of “unreliable data”, damaging the system rather than improving it.

There is definitely scope for the UK to improve Gender pay gap reporting in other ways:

  • Mandatory action plans
  • Decile (rather than quartile) representation in organisations with over 1,000 employees
  • Diversity analysis rather than just Gender (Ethnicity, Disability, Social Mobility)
Gender Pay Gap Reporting

What are you waiting for?

The eventual outcome for every organisation should be to create a culture and an environment in which everyone can be their whole self and contribute to the success of the entity without barriers from biased people, systems or processes. Gender Pay Gap analysis and progress is just one step towards these outcomes, and it signals that an organisation is on the right path.  If an organisation consciously chooses not to perform legislated reports then this should at least be mitigated with other frequent analysis, communication and action.  To do nothing at all is a clear signal that the organisation doesn’t really care about its people and eventually employees will vote with their feet.  Diversity is not woke, it’s not going away, people demand more – evolve or decay.

If you’d like find out more about how we can support you on your pay gap journey, you can book a meeting here. Alternatively, drop us an email: hello@spktral.com

Interested in hearing more on this topic?

Gain insight on how to practically implement diversity and inclusion programmes on the ground at the Public Sector Diversity and Inclusion Digital Conference. 19th April 2021, broadcast live.

Use code ‘SPKTZO-DS’ for 20% discount at https://bit.ly/3ke77Ue

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