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Gender Pay Gap: What Next?

The gender pay gap exists, now what will companies do?

The deadline for 2018 Gender Pay Gap submissions was Friday, 4 April and we’ve all seen the dismal headlines announcing that not much has changed since last year’s submissions, and in some instances, the gender pay gap has actually increased. Analysis of the latest data shows that on April 5 2018 compared to 2017: there was a mean pay gap of 14.23 percent vs 14.21 percent; the median difference was 9.6 percent vs 9.2 percent; and the disparity in bonus payments widened from 8.4 percent to 15.7 percent. In aggregate, men were paid more in the vast majority of organisations and every sector pays men more on average. Depressing.

The current submissions are a snapshot of how firms looked at April 2018, so we’re not able to see the outcomes of any action that companies may have taken since the reporting deadline last year. But even then, we shouldn’t expect drastic differences in such a short period of time. But we should expect to see action plans from companies outlining what they plan to do to address their pay gaps.

It’s important to note that the gender pay gap is not the same as equal pay –the annual submissions do not compare salaries of men and women doing comparable work. But the headline figures we see are still important, they ultimately highlight that women are missing in senior roles.

This gives companies the opportunity to reflect on why women are not progressing to senior levels. Where do they drop out of the talent pipeline (if they were there in the first place), how much of the issue is recruitment, and how much is retention? There is no short-term fix, Rebecca Hilsenrath, chief executive at the EHRC says "The causes of the gender pay gap are complex and deeply entrenched. Meaningful change will take time and concerted effort…”

There is resounding acknowledgement that flexible working could go a long way to addressing the problem. But what does flexible working mean, why is it important and where are there examples of it helping address gender inequality but also create happier and more productive workforces?

The Women and Equalities Committee produced a report which emphasises the importance of flexible working in addressing the gender pay gap but also highlights how broad the definition of flexible working is.

“Flexible working for all lies at the heart of addressing the gender pay gap. This does not mean part-time work, which we know is underpaid and limits career progression. Flexible working is much broader and includes jobs shares, late starts, early finishes, term time working and working from home.”

To date flexible working has been seen as a female issue – something women would like after having children or when they have other caring responsibilities. However, most of the working population would be keen on flexible working, in fact 87% according to Timewise. Recent research found that working parents are penalised for working part-time and suffer from poorly-designed jobs that force them to work extra hours. By having well-designed, flexible jobs and a company culture that embraces flexible working for all, greater progress can be made as we move away from the stigma associated with females working flexibly. And there is a strong business case for flexible working too.

By offering flexible working, employers make themselves more attractive to job seekers, and flexible working employees are happier, healthier and more productive. A New Zealand company, Perpetual Guardian, tested a four-day week and found its employees happier, more focused, and producing the same amount of work.

Besides flexible working, what else can companies consider?

Equal parental leave

In 2017 Aviva started offering equal parental leave to men and women working at Aviva - up to 12 months in the UK, including 26 weeks at full pay. By the end of the first year of the policy, in the UK fathers had taken an average of 21 weeks’ paternity leave since the policy was introduced, compared to two weeks in the previous year, with 95% of new dads taking more than the statutory two weeks and 67% opting to take six months off work. Diageo has just announced a similar policy and O2 has increased paid paternity leave to 14 weeks.

As an aside… Sweden is often held up as a great example of gender equality because of the government mandated equal parental leave. The Swedish government has given both sexes 480 days (16 months) of paid parental leave at about 80% of their salary, and Swedish dads must take at least some of those 16 months before the child is 8 years old. However, for Sweden, the gender wage gap persists. In 2016, more than 80% of managers at listed Swedish companies were men and not a single new business on the stock market had a woman boss. Possibly because gender stereotypes still prevail and women still take more than 80% of a couple’s parental leave while a child is under two. So perhaps there’s more to take into consideration beyond a progressive sounding policy – what needs to accompany equal parental leave to change culture/ attitudes to gender roles at work and home?

Female shortlists

A slightly more controversial but increasingly popular policy is to have female shortlists. The Labour Party successfully implemented all female shortlists in 1993 and research has shown that counter to some popularly held negative beliefs around quotas, all female shortlists have not resulted in the selection of “unqualified” women and after election, women are not stigmatised in parliament nor do they “underachieve” once elected. 

We’re now seeing similar moves in the private sector. In July 2018 Fujitsu launched a pilot of gender diverse shortlisting in their Sales teams where they were actively looking to increase female representation to 30%. From August to December 2018, 50% of all new hires in Sales were female; a 34% increase compare from January to July 2018. Fujitsu’s gender diverse shortlist means managers are required to interview the same number of men as they do women. There is no limit to how many people managers can interview, however they cannot start interviewing until they have met this requirement.

Goldman Sachs announced in March 2019 that two candidates from “diverse backgrounds” now need to be interviewed for every role and that senior leaders will be held accountable for progress.

Just as controversial and not popular at all – is pay transparency!

Research repeatedly shows that when pay is transparent, the gender pay gap drops. In the UK Verve adopted pay transparency and believes that is has an impact on its diversity. While most tech firms are struggling for diversity, Verve maintains an impressive almost 50% female workforce. CEO Callum Negus-Fancey says, “Pay transparency helps attract a more diverse workforce. People join organisations based on what they do, not what they say.”

We’ll have to wait and see what action plans companies produce and what outcomes each approach yields. What’s clear is that there is no silver bullet and crucially, no single solution. Ultimately, companies won’t see significant change unless company culture (and society at large) is conducive to embracing equal opportunity for all regardless of gender.

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