Should smaller businesses be required to report their gender pay gap?

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There have been recent calls to extend the compulsory gender pay gap reporting to smaller businesses. But is this a wise move?

There has been a big push in recent years to nullify the disparities between men and women in the workplace, politics and in general society. That is why it was a welcome announcement when large businesses had to publish their gender pay gap.

But has the gender pay gap gone far enough? Not according to everyone. Last month, a group of MPs argued that small businesses should be required to publish gender pay gap figures alongside big companies – with all submissions to include plans for how to tackle gender pay disparities.

Reporting beyond the 1%

In the UK last year there were 5.7 million SMEs, which accounted for just over 99% of all businesses, but only large organisations – with 250 employees or more – were required to report on their gender pay gap. That’s only 1% of all businesses.

This makes it extremely hard to hold organisations accountable and proactively attempt to eliminate the gender pay gap if the majority of employers in the UK are not obliged to report on the gap.

If we are to realistically achieve gender equality and the empowerment of all women and girls, or at least take a step towards fulfilling the United Nation’s Sustainable Development Goal #5, then it is essential to ensure that more than 1% of workplace inequalities are made public.

Getting more organisations to report their gender pay gap will help with broader transparency and visibility in a variety of ways.

Whilst there are a number of factors that need to be considered before widening the pool of organisations that should be required to report their gender pay gap figures, we should at the very least evaluate whether there is another tier of businesses that might benefit from the same requirement.

As it’s important that we do not make it an administrative burden for organisations with less sophisticated tools and resources in place, a more simplified regulation for those in this bracket could be the answer.     

At the end of the day, gender pay gap reporting is a critical step in any plans to attract, retain and develop a diverse talent population, and there is an opportunity to improve the performance of the entire business – creating a vibrant, nurturing and exciting place to work.

Should more organisations be required to report their gender pay gap?

To put it simply, all companies have a duty and a shared responsibility to help eliminate the gender pay gap within business, and offer equal opportunities to both male and female employees.

Using the current data of nationwide businesses and organisations, the gender pay gap is at 18.1%. Yet for those organisations that were obliged to reveal their gaps not too long ago, they showed a much smaller gender pay gap of only 9%.

This suggests that many of the companies who haven’t been covered by the rule are currently operating with major pay gaps, which is having a negative effect on the British economy.

Getting more organisations to report their gender pay gap will help with broader transparency and visibility in a variety of ways.

For example, with more information about a company’s gender pay gap, women will be able to make better and more informed decisions about whether a particular organisation may or may not be a good move for their career.

This means it will be imperative for organisations to ensure they are providing equal opportunities to both men and women to progress within their business, and showing visible female role models in top positions within a company will be key to this.

By pushing companies to reduce their gender pay gap, therefore attracting more talent – especially female talent – organisations can provide a more inclusive workplace.

After all, a more diverse workforce is conducive to a more collaborative atmosphere as different ideas, methods and thoughts are combined and challenged to force better outcomes.

Why the gender pay gap reporting might not be as beneficial to all organisations

Creating a collaborative environment which is open to different ideas, perspectives and styles of thinking should be a priority for any business – small, large, private or public.

Whilst the first step for driving diversity and inclusion internally for most organisations is through gender pay reporting, in much smaller – such as micro – businesses it may not be as advantageous and could actually skew the figures.

In many small businesses people tend to cover more jobs, which can make it harder for them to report any pay gaps at the same level as large organisations. Unlike larger organisations, small companies don’t tend to have the same resources – such as dedicated HR and payroll teams – to cover and deal with these sorts of issues.

What’s more, in a micro business the results could change dramatically if even one person left, which would result in inaccurate information and would not be a true reflection of that business or wider society.

It’s the responsibility of the senior team to take the lead by championing women within their organisation, and encouraging senior women to act as mentors and role models.

For the results to be meaningful, organisations need at least 50 people for gender pay reporting to have a genuine impact.

Despite this, it is still important for all organisations to ensure they are representing their customer base no matter how small their team may be. And the key to this is through a diverse workforce.

This means organisations still need to facilitate an inclusive environment in which everyone feels valued and can be themselves.

There is no need to make drastic and costly changes, but instead small steps as part of a longer-term vision. That’s how you get the best out of people.

Reporting gender pay gaps is part of a wider context

Whilst it’s of course imperative that more organisations adequately address this long-standing (and ongoing) issue, it’s vital that we don’t forget that differences in pay are often part of a wider context, as businesses fail to create environments that support women in the long-term.

One major factor preventing gender equality is the pipeline problem. But how can businesses address the low number of women in more senior-level positions? Through the provision of flexible working to support women throughout their career lifecycle, women need to be properly retained with the business.

For this, women’s networks are also vital in ensuring that women receive the proper support and advice they need. And it’s the responsibility of the senior team to take the lead by championing women within their organisation, and encouraging senior women to act as mentors and role models.

To ensure we’re seeing more women in those higher paid roles, it’s clear organisations across all industries need to be supporting and fostering female talent early on and throughout their careers, helping them to successfully move up the ladder.

After all, with 70 per cent of women aged 16 to 64 in work, organisations that fail to foster a whole group of talent properly in the workforces will prevent the UK from seeing a prosperous economy.

About Sarah Kaiser

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Sarah Kaiser is the Employee Experience, Diversity & Inclusion Lead for Fujitsu EMEIA. She has driven Fujitsu’s activity to become recognised as an exemplar on gender pay gap reporting, a Times Top 50 Employer for Women, a Disability Confident Leader, a Stonewall Top 100 Employer and a Top 50 Social Mobility Employer. She is passionate about finding creative solutions to unusual diversity challenges, developing cultures where everyone can achieve their full potential, and the representation of diversity in contemporary culture.

Previously Sarah was the Head of Equality at Brent Council, where she led the organisation to achieve the Excellence level of the Equality Framework for Local Government. Beforehand, as the first Diversity Manager for Tate, Sarah increased the diversity of Tate’s audiences, workforce and programme. Prior to that, Sarah was the Director of RenéCassin, an international human rights NGO.

In her personal capacity, Sarah has worked on a wide range of diversity and inclusion projects, including with Citizens Advice, Purple Light Up and the Commission on Women in Jewish Leadership. She has a degree in Philosophy from the University of Cambridge.

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20th Sep 2018 10:37

Unfortunately, extending the requirement to report GPG to 50+ employees will result in the concept of gender pay gap reporting being discredited.

The reason is that the statistical margin of error for an organisation's GPG rises considerably as the number of women falls below 100 (or men if they are the minority gender). For example, if you took all organisations with 60 employees, assume all are gender balanced and practice no discrimination, then you can expect their GPG to fluctuate within a range of -30% to +30% purely through the laws of chance alone. This is straightforward mathematics.

The end result is that for an SME that has a GPG of +10% say, it is more likely to be the result of statistical chance rather than any discrimination. If SMEs are required to publicly publish GPGs, then many will end being falsely accused of discrimination and that will lead to a backlash against GPG which is not what we want.

I explore ideas for improving GPG reporting in my blog "12 ways to improve public confidence in gender pay gap data" and points 8 & 11 expand on this point.

https://marriott-stats.com/nigels-blog/gender-pay-gap-data-and-12-ways-t...

The same argument is at work in point 12 where I oppose racial/disability pay gap reporting and suggest that alternative methods are needed such as reporting by industry or area. In effect, all companies would have to report their pay gaps but their names would not be published and the results would be reported at an aggregate level instead. I intend to consider these alternatives in a future blog post.

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