Can HR Close the Gender Pay Gap?

The Problem
The gender pay gap is the difference between male and female incomes. While the gap has narrowed over time, men in the United Kingdom in 2017 were paid 18.4% more than women, on average. The gap varies by factors such as age (it gets larger as people get older), race/ethnicity (it is smaller between white men and women than between white men and racial/ethnic minority women), and industry (women working in construction, finance and insurance, and education experience larger pay gaps than the national average, at 25%, 22%, and 20% respectively).

The gender pay gap has captured headlines in recent months in part because of new legal requirements in the UK, effective April 2018, which require private, public, and voluntary sector companies with 250 or more employees to publish their gender pay gap data, including median and mean hourly pay and bonus data. Thus far, of the 10,109 companies that have reported their data, 7,853 pay women less, 1,400 pay women more, and 856 report no gender pay gap. The differences between companies can be dramatic – Royal Mail reports a 1.5% pay gap, while Ryanair reports a 71.8% pay gap (Ryanair competitor Easyjet reports a 45.5% pay gap, while British Airways has only a 10% pay gap, well below the national average).

The increased attention to the gender pay gap is likely to drive discussions and questions in workplaces across the UK, including your own. Is your HR team prepared for tough questions about the gender pay gap at your company? Do you understand its causes and does your company have a plan in place to close the gap?

Why Does the Gap Persist?
Several explanations have been offered to account for the existence (and persistence) of the gender pay gap. Some of these explanations focus on the individual- women earn less than men because they are poor negotiators, choose to leave the workforce for long periods to raise children, choose lower-paying jobs, work fewer hours, or simply don’t have the right education or experience to obtain the highest-paying jobs.

Of course, research has shown that the gender pay gap persists even among men and women in the same occupation, with the same level of education, and working the same number of hours. For example, women actuaries, economists, and statisticians working full time earn only 80% of their male counterparts’ wages.

Individualistic explanations also ignore the legal and institutional arrangements that shape women’s choices, such as maternity leave and flexible working policies, and ongoing intentional or unintentional discrimination in education and the workplace.

Because the gender pay gap persists for both individualistic and systemic reasons, it is imperative that companies wishing to close the gap offer systemic solutions. While women certainly benefit from improving their negotiating skills or obtaining the right credentials and experience, individual action alone simply cannot solve the broader structural barriers to equal pay. Companies too have an important role to play. CRF’s 2016 research report (Creating an Inclusive Culture) explores these issues. Our research finds that organisations have often focused on increasing the number of employees from underrepresented groups, rather than addressing the organisation culture that determines whether people feel included and thrive. Focusing on two key aspects of organisation culture — the values and attitudes of leaders, and the systems and processes that define how the organisation operates — the report explores what an inclusive culture looks like, and sets out practical recommendations for building one.

Closing the Gap: What Does Good Look Like?
Media company Sky, a Times Top 50 employer for women, has made a major push on gender diversity as part of their goal of building a more inclusive culture. The company has a number of programmes designed to improve gender representation across all teams and has targets including the goal of achieving 50:50 gender balance in senior roles, increasing the female home service engineer workforce from 2% to 20%, and increasing female representation in technology departments to 30%, all by 2020.

  • Sky’s Women in Leadership programme requires gender balanced shortlists for all senior roles, offers tailored sponsorship and development programmes for high potential women, and runs internal networking events with senior female role models. The company also offers flexible working and is actively building its reputation as an employer of choice for women.
  • Sky’s Women in Home Service programme started 360 women on the Trainee Engineer Programme in 2017. This six-month paid placement guaranteed all women who completed it a permanent position with Sky. Participants received training on confidence and resilience in the workplace, a dedicated mentor, and a City & Guilds qualification upon completion.
  • Sky’s Women in Technology programme includes a free evening and weekend course that teaches women how to code, a Sky Tech Scholars scheme that encourages women to enter technology by offering three women a £25,000 grant in addition to dedicated support and mentoring, and sponsorship and development programmes for women in technology.

Sky’s efforts are paying off – women’s mean and median hourly rates are only 5.2% and 8% lower than men’s, respectively. 51% of men at Sky receive bonuses; 49% of women do. While women’s mean bonus pay is 18.5% lower than men’s, their median bonus pay is 12.9% higher.

Recommendations
We offer the following recommendations to HR professionals seeking to build the confidence and skills needed to close the gender pay gap at their companies:

  • Make sure you understand the problem, including both individual and structural barriers to equal pay.
  • Know your company’s data, and what steps the company has or is going to take to close the gap.
  • Know your competitors’ data, and what steps they have or are planning to take to close the gap.
  • Work with colleagues across functions to clearly delineate roles and responsibilities with regard to pay equity. Make sure your employees know where responsibilities lie.
  • Embrace compensation transparency- publish salary ranges, criteria, and formulas used to determine pay increases and bonuses.
  • Hold managers accountable for their reports’ development.
  • Monitor and evaluate talent identification processes, development opportunities, promotions, raises, and overall compensation at regular intervals (annually, biannually, etc.) to ensure they are bias-free.
  • Experiment- The right solutions to closing the gender pay gap will vary and will depend upon company culture and other factors. Review successful programmes at other organisations, set ambitious goals for your company, try a mix of solutions, and learn from mistakes.
  • Regularly update internal and external stakeholders on your progress.
  • Make flexible working the default.

References and Reading List

Gov.UK. 2018. ‘Gender Pay Gap Service.’ (https://gender-pay-gap.service.gov.uk/).

Jones, Lora. 2018. ‘What is the Gender Pay Gap?’ BBC News (http://www.bbc.co.uk/news/business-42918951).

Kommenda, Niko, Barr, Caelainn, and Josh Holder. 2018. ‘Gender Pay Gap: What We Learned and How to Fix It.’ The Guardian (https://www.theguardian.com/news/ng-interactive/2018/apr/05/women-are-paid-less-than-men-heres-how-to-fix-it).

Office for National Statistics. 2017. ‘Statistical Bulletin: Annual Survey of Hours and Earnings: 2017 Provisional and 2016 Revised Results.’ (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2017provisionaland2016revisedresults#gender-pay-differences).

Office for National Statistics. 2016. ‘Find Out the Gender Pay Gap for your Job.’ (https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/findoutthegenderpaygapforyourjob/2016-12-09).

Sky. 2017. ‘Sky Released Gender Pay Gap Report.’ (https://www.skygroup.sky/corporate/media-centre/articles/en-gb/Sky-releases-Gender-Pay-Gap-Report).

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