Gender PayThe Government’s focus on the gender pay gap should be welcomed, says Mercer. However, while the final draft of the reporting requirements brings some much needed clarity, the measures proposed are blunt and organisations should be prepared to explain why they have a pay gap and how they plan to close it.

Commenting on the final Gender Pay Gap regulations, Mercer said that many organisations are worried that current and future employees will see a gender pay gap as reflective of women being paid unequally, when in reality this relatively blunt pay gap measure provides little insight into whether men and women are paid the same for the same work.

The regulations require UK organisations with more than 250 employees to report on their gender pay gap. The gap is calculated by taking all employees in an organisation and comparing what women earn compared to men. This is often confused with equal pay. Equal pay legislation, in contrast, compares the pay of men and women at the same level in the organisation and equal pay rules outlaw significant differences in men and women’s pay for same or similar work. An organisation having a poor gender pay gap does not imply an unfair treatment of women in terms of pay, but it does likely point to issues of low female career progression or less women in higher paid specialist roles.

Chris Charman“We welcome the Government’s focus on the issue and it is clear that it is getting the attention of businesses,” said Chris Charman, reward expert at Mercer. “Organisations must now report using quite a blunt series of statistics that in themselves do not give the employer any insight, and so they should focus hard on understanding what is driving their gender pay gap. Employers will need to demonstrate for themselves that they are paying fairly and that the gap is not down to unequal pay. The first step for organisations must be to ensure their pay and bonus programmes do not discriminate and then look into the deeper causes of any gaps.”

Charman continued, “In companies we have worked with, the gap can often be explained through workforce issues, including lack of female career progression or women’s low representation in technical or specialist roles.Employers must think well beyond pay to understand what drives the gap in their company and explain this openly.  Although employers are concerned about equal pay cases, their biggest fear and risk is one of reputation. Beyond reporting, organisations will need to engage in a strong communication exercise with current and future employees to explain the past but also set out how they will change and close the gap.

“The regulations bring with them a great starting point for employers to improve their workplace gender balance. Mercer’s When Women Thrive global research from 700 employers point to a number of practices that enable women and workforces to thrive and prosper, for example: comprehensive programmes that focus on female career development and progression, women’s early access to supervisory positions; leadership and male ownership of the issue, as well as active management of shared parental leave programmes.  Although employers need to move quickly to start on these longer-term opportunities, there are also some quick wins. Less than a third of UK employers have provided unconscious bias training to managers who take pay and promotion decisions.”

Charman concluded, “Government must also help in areas that employers cannot control. To genuinely address the gender pay gap in a generation, the Government must take more steps to support early educational initiatives that challenge gender stereotypes of work, to enable young boys and girls to see a less gendered view of their roles in society in the future.”