The call for equal pay for women made headlines at the Oscars this month with Patricia Arquette using her acceptance speech to highlight pay disparity between male and female actors.
There have been increased calls here in the UK too recently by some Labour MPs to Vince Cable to implement pay transparency now which would aim to see large companies of over 250 employees publish the pay gap between the hourly wages of men and women on an annual basis.
The idea is that if we can see where the pay gap still exists, it will focus minds on taking the actions necessary to reduce that gap. The rules themselves aren’t new – they were part of the new Equality Act 2010 – however they were made voluntary by the current government with the view that a voluntary approach would still drive progress.
However, in five years, only five companies have reported on their gender pay gap. And, according to the Fawcett Society, the UK charity that campaigns for women’s equality and rights, the pay gap between the genders has now become so wide that women effectively work for free for two months every year.
A recent CBI positioning paper (Building on progress: boosting diversity in our workplaces, 2014) called for the issue of the UK’s persistent overall gender pay gap to be put into the same spotlight as the Lord Davies review did for women on boards. The hope is that by promoting an increased awareness of the issue through a ‘Davies style’ push on the equal pay agenda we might deliver real progress over time for women in the workplace.
So, with calls from celebrities, the CBI and with Labour looking to distinguish itself from the Conservative party in the up and coming general election, this is one area that is being pushed to the fore and its likely, therefore, that should Labour win in May, pay transparency may be coming your way soon.
So why is it important and what are the real benefits of pay transparency?
Evidence shows that companies that carry out regular audits of equal pay tend to have more women in senior positions and employees who know and understand how their pay is set and are confident they are paid fairly in comparison to their colleagues are more likely to perform better.
Best performing companies according to McKinsey (‘Women Matter 2012: Making the Breakthrough’) are those that succeed by supporting gender diversity as a way of life – it’s about having management commitment and making it visible through a critical mass of initiatives that are rigorously monitored and driven through. In other words, these companies walk their talk and make gender diversity part of their culture.
And walking the talk is critical if you want to attract the best. Opinion surveys have shown that young people entering the labour market are more likely to want to work for a company that provides equal pay than one which does not (EHRC 2011) and – with websites like Glassdoor publishing employee views on their companies pay and benefits – if you do have big issues and fail to address them, you may lose control over what is put out into the ether.
If asked, would you confidently be able to describe the pay picture in your organisation? Even if you are sure you don’t have a pay gap now, what is there to say there may not be one created inadvertently in the future by current pay/recruitment/promotion practice? Can you really answer with confidence that males and females are being treated equally and, if you can’t be sure, do you understand the level of risk posed? Can you explain any differences in pay for people doing similar roles? Do you have a number of females at in the lower pay spread in your organisation and can you defend it?
Without proper pay transparency it is very hard to confidently see the full picture and feel confident you aren’t inadvertently discriminating in your pay practice. One way to start to get to grips with what is really going on is to conduct an Equal Pay Audit. By itself it won’t fix any gender pay disparities, however it enables you to start to lift the lid and take steps to understand what is really going on from an equal pay perspective. It also means that you are:
- complying with the law and good practice
- committed to identifying, explaining and eliminating unjustifiable pay gaps
- can confidently say you have rational, fair, transparent pay arrangements
- are showing employees and potential employees a commitment to fairness and equality
- are demonstrating your values to those you do business with
At Innecto, We see pay inequality as just the tip of the iceberg; it’s the presenting face but, underneath, are lots of practices, policies and behaviours that contribute. We can’t fix all of them by ourselves – some are deeply ingrained in the way that we act as a society and even in the way we treat our children – but, by taking that first step and starting with understanding your pay picture, you also create a platform to start thinking more deeply about what kind of organisation you really want to be and what messages you give either gender about working for your business.
More pay transparency is on its way so don’t let government legislation, fear of an equal pay claim or a response to Glassdoor be the reason you finally decide to act.
Justine Woolf is a highly experienced consultant in the area of reward and recognition both as a senior consultant with Innecto and in reward management roles with well-known organisations such as London Underground, GlaxoSmithKline, Woolworths and the Post Office. Justine’s key areas of expertise include pay structure design, performance management, design and implementation of incentive & recognition schemes and employee engagement.
