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How gender pay gap reporting will improve businesses

Louise Cooper, journalist at CooperCity, discusses her thoughts on our latest Big Question – Do you think that gender pay gap reporting is the best way to bring about better equality in the workplace?

Bill Gates wrote in 2013: “I have been struck again and again by how important measurement is to improving the human condition.” It was in his annual letter from his charitable foundation and he was referring to schools, vaccinations and health services in poor countries. But his quote mirrors another from American Business Guru Peter Drucker: “if you can’t measure it, you can’t improve it.”

So for me, just forcing companies to measure and report the Gender Pay Gap is not a small step for man, but a giant leap forward for woman (apologies Neil Armstrong). Just measuring the gap is a force for good. It starts a much needed conversation about a fairer representation of women in business.

And this is not just about equal opportunities being the “right and fair” thing to do. It’s about productivity and profit. As the House of Commons latest report on the Gender Pay Gap puts it, “Women are better educated and better qualified than ever before, yet their skills are not being fully utilised.” And that’s a cost to our economy.

Emily Jones, HR Manager at Coty: “We recently had a visit from senior Vice Presidents to review Key Performance Indicators at a manufacturing plant. Historically, management have only looked at production rates and machinery etc. But this time round they also wanted to look at gender pay gap data, which means that this now has significant exposure at a senior level in the organisation.” 

Jemma Smoker, recruitment and training manager at Creams Café agrees: “I think everyone is now more educated and are aware that we are all working to reduce the divide, which is sadly still happening in businesses across the globe. I personally think that it will also encourage employees to pay equally, especially big companies that have a great reputation but would not want to be seen to be paying males and females differently.”   

It could be argued that the BBC has had its reputation damaged after it was forced to disclose the salary details of its top male and female presenters. But even privately within an organisation, greater transparency can do good. Collecting and calculating salary data in order to report the gender pay gap is likely to have focused managements' minds far more closely on pay fairness, unconscious bias and not least, applying the equal pay for equal work law - a good result. 

Even so there are many criticisms of Gender Pay Gap reporting. Firstly it could be argued it has achieved little. At a national level, the gender pay gap hasn’t decreased from last year, it has stuck at around 10%. The number of women in senior leadership positions in big quoted companies has shown no improvement. And this lack of concrete results so far is partly reflected in The REED Big Question. It asked “has the gender balance improved since the Gender Pay Gap reporting came into force?” 36% said it hadn’t improved the gender balance at all and only 30% said it had (and roughly one third didn’t know).

The way the median gender pay gap is measured and reported has also been heavily criticised. As Josie Parsons, director of finance, Local Space states: “Gender pay gap is a blunt instrument and the numbers can be misleading.” Independent Statistician Nigel Marriott, stated in a recent House of Commons hearing, “a recommendation for improvement is around explanation and guidance to employers on how the figures are calculated. I have to say that all the guidance published by bodies on how to calculate (the number), are very ambiguous.”  And ambiguities can lead the unscrupulous to manipulate the data.

Large multi-nationals can choose to report subsidiaries separately, which makes it difficult to interpret the data on a group wide basis. Partnerships such as accountants, law firms and financial firms, can exclude partners’ compensation from the calculation. Yet these are the most highly paid in the organisation, and women are seriously under represented at this level. There is also little oversight or auditing of the numbers. Despite anomalies in the data, there have been no fines and sanctions.  

Even assuming that all organisations do report accurately, the numbers need to be used as a tool for change. Reporting the number is not an end in itself. The Financial Times analysis shows that even amongst the largest firms, a quarter had no resultant action plan as to how to reduce the Gender pay gap. Claire McNicol, former head of financial planning, Bovis Homes: “ It’s not just about pay, but about equality for all regardless of gender, work-life balance and opportunity - it’s a much bigger picture.” 

Charity Maine, director of finance, Anglian Learning :“Reporting is not the only answer, but part of a wider plan. Gen Z will make a 'stride' but this has been going on for a few generations already.” 

I am optimistic that reporting the numbers will eventually make a difference. 60% of those questioned agree – that that reporting the gender pay gap will bring better equality in the workforce. I was hosting a conference recently with Amber Rudd MP as a speaker. She was Minister For Women and Equalities in 2018 – the year that gender pay gap reporting came in. She spoke about how proud she was of her government for making it mandatory for any firm over 250 employees.

I agree. This is just the start of a journey towards equal opportunities for all, not just women. As Peter Stansfield, finance director, SPB UK and Ireland says: “If you employ the right people for the role, it doesn't matter who they are or where they're from.”