Five Things You Need To Know About Gender Pay Gap Reporting

06/04/2017 12:11 BST | Updated 06/04/2017 12:11 BST
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Today the law changes so that organisations with more than 250 employees will have to publish information every year about their gender pay gap. Winning the battle in government to make this happen was my final achievement as a Government Minister, two years ago. So I'm delighted to see the regulations come into force today. Here are five things you need to know about the change.

1. The Gender Pay Gap is not the same thing as Equal Pay

The media often mangles the distinction, so it's not surprising many people confuse the two concepts. Equal Pay is when men and women are paid the same for doing the same work, and this has been a legal requirement for more than four decades. The Gender Pay Gap compares the average hourly pay for men and women. So most companies have a Gender Pay Gap driven by a concentration of men in senior, higher paid roles and women in junior, lower paid roles, but may not have an Equal Pay problem.

2. Most companies think they don't have a problem, but that's because most companies haven't crunched their numbers

I've met enlightened, forward-looking executives who are surprised and appalled when they run the analysis on their own company's gender pay data. The fact that so few have done this means there is a lot of complacency about the scale of the problem. To get started on your analysis, see this useful guide from CIPD.

3. Not breaking the law is not enough

Equally some employers look at the numbers and breathe a sigh of relief when they conclude their gender pay gap is not driven by equal pay problems, then park the issue and move on to the next priority. Making firms focus on gender inequality more generally within the organisation, including issues of talent attraction, promotion, retention and leadership is really the point of this change in the law. 84% of young women said they would consider a company's gender pay gap when deciding whether to apply for a job, so it can't be ignored.

4. The numbers are just the start - find out what story they are telling

Companies will have to publish a suite of numbers: the mean and median gender pay gap for hourly pay, the mean and median bonus pay gap, and also the proportion of men and women in each salary quartile. Taken together, these numbers start to paint a picture - for example a high mean pay gap and low median pay gap may point to a few extremely highly remunerated men at the top.

The numbers are really a springboard for further questions, and companies can delve into the data at much more granular levels than what will be published to understand what's driving the pay gap. If it seems high in some divisions, you might do a deeper pay review to check pay levels and pay rises are being fairly decided. Staff who identify as neither male nor female can be omitted from the calculation, but given the discrimination non-binary people face at work you may wish to look more closely at the data for these individuals to reassure yourself pay and reward systems are working as they should. Similarly if your monitoring data is good enough, look at the data by race, disability, sexual orientation and other equality strands (and if it is not good enough, then now is a good time to improve your monitoring practices). This is an interesting exercise to identify potential problems - and it may give you a head start in the event that pay gap reporting is extended in future.

5. The key question is: what action are you going to take to close the gender pay gap?

Ultimately this is what it is all about. While some parts of the media will unhelpfully focus on naming and shaming and misreporting the numbers, this is about the journey of each organisation.

Transparency on the numbers means staff, shareholders and customers can hold companies to account on progress, so communicate with them your analysis of the problem and what you plan to do.

Gender pay gap reporting is not a panacea, but it is an important and helpful tool to bring urgency and accountability to efforts to tackle the entrenched problems of gender inequality in the workplace

This blog was first published here.