Mind the
gender reporting
pay gap!

If your company is of a certain size and has not yet prepared for the new legislation, now is the time act to avoid potential communications issues, suggests Hannah Griffiths.

With just four months to go until the gender pay gap disclosure deadline, so far only 269 – just 3% - of eligible organisations have taken the leap.


Most early movers have been smaller organisations, with only eight FTSE 100 listed companies publishing to date (29 November). Manufacturing and human health and social work activities sectors have led the charge, with professional scientific and technical activities and education sectors close behind. Although a woefully low proportion, this is exactly what commentators on the issue predicted, leaving anticipation to mount.

A reminder of what’s required and why

By 4 April 2018, in compliance with the updated Equality Act, all businesses with 250 or more UK employees must publish six statutory calculations that show the size of the pay gap between their male and female employees. These numbers must be published on the organisations’ website and uploaded to a dedicated government website. Importantly, organisations can – and we urge must – support this data with a narrative and action plan. In our opinion, this is a crucial opportunity to tell the complete and contextualised story of the pay gap calculations, which, on their own are relatively meaningless.

 

"The aim of this new legislation is to accelerate progress on eliminating the gap and in doing so to maximise talent and create a fairer, more inclusive workplace."

 

By all accounts, this help couldn’t come sooner. According to the TUC and a recent WEF report, at our current slow rate, it will take decades, even centuries, for the UK to achieve gender pay parity.

Who’s already doing it well?

Of the small proportion of first movers, those communicating most successfully are following these patterns:

  • approaching the challenge with openness and humility – acknowledging that numbers are not ideal (as they won’t be for the vast majority) and viewing the legislation as an opportunity to understand themselves better and kickstart the changes that need to be made;

  • exploring and explaining the ‘why’ as well as the ‘what’ – using their narrative to articulate why the gap exists;

  • seizing the opportunity to tell a compelling story about why fair pay and equal opportunities are a business imperative, not just a nice to have;

  • nailing their colours to the mast and setting out their plan to close the gap going forward; as well as outlining what they have already done to close the gap to date;

  • tailoring their communication on the gap to key; and

  • where relevant, going above and beyond the required disclosures. Leading diversity and inclusion reporters, including PwC are anticipating future demands and best practice by also disclosing their BAME pay gap.

What are the common challenges and missteps?

A number of pitfalls and potential risks are also emerging:

  • labouring the difference between the pay gap and equal pay legislation – a move that could be viewed by a casual observer as defensive;

  • not having your story straight – simply being bravely transparent is not enough, you must be able to articulate the why;

  • getting your moment wrong – journalists will be on the lookout for any organisation who they perceive as trying to hide their publication;

  • reporting your quartile data in a way that makes sense to your colleagues;

  • inadequately explaining why and when employees get bonuses; and the elephant in the room, of course – for some the data may indicate that they have been unwittingly breaking the equal pay law, an issue that will require legal advice.

Why does it pay to take the communication of your pay gap seriously?

Companies that have a gender pay gap will not be subject to any legislative penalties. However, as the issue is understandably emotive, the media is showing a healthy appetite for gaps at either end of the spectrum – with LandSec and Diageo receiving column inches for their large pay gap and negative pay gap respectively.

Recent surveys and research have also highlighted the perceived reputational risks of an undesirable or badly communicated pay gap. Sarah Gordon from the Financial Times, a leading voice on gender pay parity, has said that “not addressing the gender gap appropriately carries significant commercial and social dangers, including poor morale, losing talented employees and bad publicity.”

On a more positive note, numerous reports have also articulated a clear business case for a more diverse and equally proportional workforce. In the words of WGEA’s director, Libby Lyons “There is an abundance of evidence out there that says organisations that are gender-balanced are more productive, retain staff longer, staff are more engaged, they get better shareholder returns.”

 

"Forward-thinking businesses will embrace this as an opportunity to build a more balanced workforce and to reap the rewards this will bring."

 

For further guidance on communicating your gender pay gap and identifying opportunities to reduce it further, see our 101 guide online or contact us at [email protected]

This article first appeared in Informed magazine, published by the Investor Relations Society in the UK. Issue 97, Winter 2017/18