Gender pay gap reports make sorry reading Article icon

Gender

When the Equality and Human Rights Commission released the results of a survey of more than 1,000 business managers and their views on maternity leave and pay, it did not make pretty reading. More than one-third of respondents said they felt it was reasonable to ask a woman about her plans to have children in the future during recruitment, while 59 per cent said a woman should have to disclose whether she was pregnant during the recruitment process. One-third said women who become pregnant are ‘generally less interested in career progression’.

It came as little surprise, then, that businesses did not rush forward to disclose their gender pay gap data before the 4 April deadline set by the Government. Indeed, more than 1,000 companies left it right to the wire.

Just over 10,000 companies, which employ more than 250 employees, have now submitted their figures, which reveal that the median pay gap is 9.7 per cent. Just eight per cent of companies, including KFC, Starbucks and Costa Coffee, said they had no gender pay gap, based on the median measure. But 78 per cent of companies conceded that men are paid more than women.

Lingerie group Boux Avenue, which is owned by former Dragon’s Den regular Theo Paphitis, reported one of the greatest gender pay gaps, at 75.7 per cent, while budget airline Ryanair reported a gap of 72 per cent and Millwall Holdings, the London football club’s parent company, 80 per cent.

But the numbers by themselves do not tell the full story. The Government required companies to publish their data on their corporate sites, but also on a Government website, which offers a facility to include a report to put the figures into context. Many companies appear to have taken the opportunity.

Anne Kirkeby, lead corporate reporting consultant at Black Sun, says: ‘There is a gap between those companies which take this seriously and those which don’t. And there are some companies who take it very seriously.’

In fact, when stories such as the BBC gender pay gap are so high on the public agenda these days, it is crucial that businesses take this opportunity to explain their own gender pay gap and to highlight what they are doing about it.

Hannah Griffiths, sustainability advisor at Merchant Cantos, says: ‘On their own, the numbers can be meaningless and there may be good reasons the numbers are skewed. The narrative is the only opportunity to tell your story.

'The response to the problem is what is important – explaining what they are putting in place,’ says Stephen Butler, investor engagement director at Luminous, the brand communications agency. ‘The BBC pay gap story has been high on the agenda and companies are apprehensive about the response they might get. Particularly large companies – they are in the public domain and they know they are going to be in the spotlight and in the headlines.’

How Easyjet is tackling the issue

Easyjet is one company to have attracted a lot of attention because of its 52 per cent gender pay gap, which is down to highly-paid pilots being mostly men and cabin crew being mostly women. As a result of this, Easyjet has now committed itself to ensuring women make up at least one-fifth of all new pilot recruits by 2020. (In contrast, just eight of Ryanair’s 554 UK-based pilots are women, but the airline has made no commitment in its report to address this discrepancy.)

Easyjet’s new chief executive, Johan Lundgren, has also voluntarily taken a £34,000 pay cut to match the salary of his predecessor, Carolyn McCall. Lundgren said: ‘I also want to affirm my own commitment to address the gender imbalance in our pilot community which drives our overall gender pay gap. I want us not just to hit our target that 20 per cent of our new pilots should be female by 2020 but to go further than this in the future.’

Ultimately, says Kirkeby, businesses should see it as a duty to engage with all stakeholders – primarily, of course, their employees – on this issue. ‘Directors have a responsibility for the success of the company and therefore they must engage with stakeholders.’

This is something that, if approached right, companies can turn to their advantage, says Rachel Carmen, senior consultant at creative consultancy Radley Yeldar. ‘Government have been quite canny with this. They have said this is law and you have to publish this data. It invokes issues about reputation and sets up competition among companies. So now it is all about how to make the best of it from a reputation perspective.

‘At face value, the data can seem quite damaging. For example in the construction industry, the data may well be damning because there is a high level of men in management positions. A number of companies are just not ready for this and they will just publish the data and move on. Those that are more forward thinking are viewing this as a reputational opportunity. This is about establishing a new normal and is about how the company engages culturally but until we start to see the leaders of the pack coming through we won’t see fast change.’

Numerous studies have proven the link between a company’s diversity and its ability to perform well. The Peterson Institute for International Economics recently published research on 21,980 global listed companies in 91 countries which showed that having at least 30 per cent of women in leadership positions – what it calls the ‘C-Suite’ – adds six per cent to a company’s net profit margin.

‘There are business advantages to this – countless studies have shown that diverse businesses perform better – that’s diverse in terms of ethnicity, gender and social class,’ says Butler. ‘A business needs to be representative of the society it operates in. Society grants a business a licence to operate and can easily revoke it.’

Making steps to change the dynamic

So why do businesses seem so reluctant to embrace this? ‘Sadly a lot just don’t see the benefit – that it is good for the culture and the brand of the business,’ says Daniel Redman, head of research at Design Portfolio.

Some groups, however, are going a step further when it comes to reporting their gender pay gap. Shell has included video footage in its report to explain its pay gap, and launched initiatives to try to even the field as it seeks to establish itself as a company leading the effort to close the gap. Shell is sponsoring scholarships for women entering STEM fields, while drinks giant Diageo is offering internships in manufacturing for women. It has also launched a job sharing platform for employees to find job sharing partners within the company.

Shell has also launched a 12-month social media-led campaign to open the discussion on the gender gap in engineering and technology.  The video-based campaign is informed by the findings of a series of industry-wide interviews with female engineers and third-party research and aims to utilise social media to open discussion on this complex industry issue.

Graham Sparks, vice president of diversity and inclusion at Shell, says: ‘We want to help change the narrative in this area to ensure a sustainable, gender-balanced talent pool for the future. This is good for our business, good for our people and is also the right thing to do.’

‘Shell is a very good example, especially for a company in such a male-dominated industry,’ says Redman. ‘Shell is definitely the most vocal and clear in explaining how it intends to get more women into engineering and has introduced specific targets for the future.’

A good report about the gender pay gap should address the issue of diversity among all stakeholders, says Kirkeby. ‘Their workforce needs to reflect their stakeholders in order to understand them. A good example is Sage. In addition to providing regional information, it also addresses how it is trying to close the gap and why it exists,’ she adds. 'A good narrative will include the sorts of initiatives the company is doing and they will be things that the business can be held to account over. The more specific they are, the better. Companies need to move beyond just a statement of intent. They need to be specific about what they have done and how all the way up the company. Some companies talk about the recruitment process – for example how they are writing job specs to appeal to women, then getting them in and working on keeping them. Companies need to be talking about how to ensure they help women in their careers for the long-term.’

Radley Yeldar’s Carmen says it is vital that companies are honest and transparent about their position and they must be prepared to say what they are doing about it. ‘If is just some flannel from the chief executive or HR director but no clear strategy and how this will be effective, then it won’t work.’

Furthermore, it needs to explain how addressing the gender pay gap will improve the business overall, says Redman. Butler agrees, adding that companies need to have a thorough conversation about what has caused the gap and how it can be corrected. The conversation needs to look at the recruitment and retention of women throughout their careers, but should also focus on how to encourage men to take shared parental leave, for example.

Kirkeby says: ‘I personally think there has been too much focus on boardroom diversity: they have started the wrong way around. Companies often can’t create boardroom diversity from their own ranks because board members are often recruited from other companies. So, instead of putting in the work internally, companies are recruiting from elsewhere at board level. At the educational level, women have historically not studied the subjects which lead to a highly-paid career. That needs to change. Some companies do go out and sponsor research and schools to heighten interest in their subjects because they need to widen the pool they will be fishing from.’

The information businesses put out in relation to their gender pay gap should also be reflected consistently in the annual report.

‘Given that companies must now report on the gender pay gap on their websites, this would be an obvious key performance indicator (KPI) for the annual report,’ says Kirkeby. ‘Other KPIs might be, for example, mentoring programmes and how many women are involved in these.’

Reacting to the findings

Companies are already reacting to their findings. Some have started to introduce gender-neutral job adverts and are teaching managers about unconscious bias while others are using hiring quotas to raise the numbers of women being recruited. Companies can develop talent with mentoring programmes and development networks for women. Offering equal parental leave to men and women as well as flexible working and coaching for women on maternity leave can help with retention of employees, says Kirkeby. Some companies have also introduced an annual award dedicated to female talent and are doing more to encourage women into their fields through school careers events and by providing internships and scholarships for female STEM students.

Justine Dixon, senior corporate reporting consultant at brand and communications agency Superunion, adds: ‘Very early on the report needs to be explaining why diversity is good for the business. The report needs a clear section outlining what companies are doing about this issue. First, what they have been doing historically, ideally supporting this with progress (growth in the percentage of women in senior positions over time). Second, an action plan setting out what they are committing to do in the future to close the gap. Some companies are disclosing targets, but not all. For example, signing up to the Women in Finance Charter and aiming for greater than 30 per cent of women in leadership positions by 2020.’

Whatever route a business takes to encourage greater diversity, how they communicate these is key. Griffiths says: ‘Companies need to plan their employee communications and time them carefully so no-one is left in the dark about this issue. This might be via internal films or webinars for staff. Going forward, companies need to consider where other touch points might be. If they think this is going to impact on their ability to recruit the best candidates, then they need to include something on the recruitment site.

‘When they are writing the report, they need to think about how they have communicated this issue before. If they have claimed to be a leading light, for example, this needs to be reflected in the conclusions and action plan. Consistency and honesty are key. This is a long-term game. The numbers are not going to change radically in a year.’

Roberts agrees: ‘I think it will be something which will change over time – this is a complex issue that can’t be immediately resolved, and company actions will take time to reflect in the figures.’