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April 2018 was the first time UK companies were mandated to report their gender pay gaps. This brought the issue of inclusion and diversity in the workplace to boardrooms across the UK.

Over the past 12 months, the issue of gender diversity and inclusion has rarely been out of the news. As the benefits of inclusion and diversity become more apparent, companies are working hard to create more inclusive workplaces. This report “Inclusion and Diversity - What next for business” sets out the lessons learned over the past year and what business should consider as next steps for going beyond gender disclosures.

The first year of mandatory gender pay gap reporting revealed an average median pay gap of 18% in favour of men in business across the UK.* The extent of the gap ignited a broad conversation around the issue of inclusion and diversity (I&D) in the workplace in Britain.

* April 2017, based on estimates from the Annual Survey of Hours and Earnings, Office for National Statistics

After business had published year one reports, there were a number of themes that we saw in the reports themselves and in how they were received.

Beyond the gap – findings from year one:

1. Numbers are only part of the story – whilst the legislation requires business to publish numbers, the context around those and any changes is key

2. Support from leadership is key – quotes from leaders showing support and understanding the importance of the agenda strengthened disclosures

3. Transparency is everything – audiences reacted better to businesses who reported transparently, those who tried to obfuscate their messages were challenged

4. Plans are a requirement – reporting on how you plan to close the gap remains key to a strong gender pay gap report

5. Targets can help –  publishing targets by which you can be measured landed well with stakeholders

6. Broad-based support – it was not just the government who was looking at the reports, it was generally agreed that it is time for business to focus on this

7. Employees voices are powerful – Those reports which leveraged their employees opinions were seen to be making a genuine commitment.

It is widely accepted that the inclusion and Diversity agenda is not standing still. Discussions throughout 2018 have been laying the groundwork for what could and/or should come next.

Future of Inclusion and Diversity reporting:

1. Have a point of view – beyond just reporting on programmes and progress every business should have a point of view on the importance of inclusion and diversity to them

2. Parental leave – many businesses have recognised the benefits that sharing parental leave brings to business. More are implementing policies in this space, although two-thirds of the FTSE100 still do not reference their parental leave policies on their websites

3. Track your performance – stronger accountability and the setting and reporting against targets and remuneration associated with delivery continues to be an area that needs to be strengthened

4. Employee engagement – employees and the internal culture remain key to the success of inclusion and diversity programmes and so businesses need to step up their approach to engagement

5. Moving beyond gender – Although the government did not implement the BEIS recommendations it was accepted that business needs to be looking at a broader approach to inclusion, including ethnicity, age, disability and social mobility

6. Diversity at the top – Board and senior leadership diversity continues to lead the discussion. The Hampton-Alexander review’s assessment of Board level diversity and recommendation for 33% targets is indicative of the aim to hardwire diversity into succession planning

7. Call to action – With the first set of numbers now published it is important that the narrative and actions around the numbers continue to evolve, especially if the numbers continue to increase

There’s never been such a focus on business and their approach to inclusion and diversity or such an expectation for business to take action. It is all summed up nicely by the quote from Penny Mordaunt

“ More action is needed to ensure businesses know how they can make use of their best talent and make their gender pay gaps a thing of the past.”  - Penny Mordaunt Minister for Women and Equalities

For more information, please contact Helen Wilson, Sustainability Strategist, MerchantCantos.

Download a copy of our report here.