Head of Diversity Pearn Kandola
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Three trends gleaned from gender pay gap reporting round two

30th Apr 2019
Head of Diversity Pearn Kandola
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Gender pay gap reporting
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Gender pay gap reporting

We’re all aware by now that the second round of gender pay gap reporting has brought disappointing results. But by investigating the data a bit deeper, useful insights have emerged as to how employers can put their best foot forward as we head into the third year of reporting.

April 1st marked the second annual rush for organisations to release their gender pay gap figures. What makes 2019’s results particularly interesting though, is that we now have two full sets of comparable data.

With around 10,500 records made public two years in a row, we are now in a position to see for certain whether anything has actually changed in the disparity of pay between men and women.

At Pearn Kandola, we have been analysing the data to see if this public ‘naming and shaming’ exercise has been enough to force companies into making a meaningful change over the past 12 months.

Disappointingly, virtually nothing has changed, which is also reflected in our own research on the FTSE 100. Across the board, almost eight out of ten companies pay men more than women.

We still have 20 industry sectors paying men more than women. Indeed, while 48% of the organisations that have released their figures are able to say that they have narrowed their gap, 44% have seen their divisions widen, meaning that these figures are effectively cancelling each other out.

At this current rate of development, it has been estimated that it could take up to 60 years to achieve full pay parity between the sexes – and personally, I think this is an optimistic timeframe.

In the meantime though, there are some clear trends that can be gleaned from our analysis, which can be actioned right now.

We need to see organisations focusing on lateral hires of women into senior posts, as well as developing and nurturing women in more junior roles to become leaders.

1. The ‘bonus pay gap’

An intriguing result is that while the salary gap hasn’t shifted, the gender pay gap in the bonuses given to men and women has in fact decreased. In the FTSE 100 alone, the average ‘bonus pay gap’ has lowered from 32% to just over 24%.

This suggests that many organisations are trying to control the things they can quickly have an impact on, such as bonuses, but are still struggling to make significant headway in addressing the issue on a grander scale.

To combat this, organisations should be focusing on the progression of historic and ingrained salaries, which are often stuck in pay grades.

2. Senior leadership

In terms of workplace hierarchies, the data has shown some movement at the lower quartile level, with widespread female-focused recruitment in the last year seeing better levels of women at more junior levels.

Although it’s great to see this kind of active recruitment, the result is actually an overrepresentation of females in junior positions, which, in the short- to-medium term, makes the gender pay gap worse.

To counter this, we need to see organisations focusing on lateral hires of women into senior posts, as well as developing and nurturing women in more junior roles to become leaders.

There's evidence to support this idea, with the research showing that the companies which have seen the most impressive improvements are those that have recruited and developed women into more senior roles.

3. Flexible working as a solution

Many organisations seem to be pushing flexible working as an option to help with their gender pay gap figures. It's worth flagging, however, that this can actually result in an increase of their gap, simply because the salaries of part-time workers do not tend to keep up with those of their full-time counterparts.

The problem, of course, is that it tends to be women who operate in flexible or part-time roles. There are several reasons for this, but paternity leave is one that plays a key role. Women are more likely to be seen as caregivers than men, and so will often be expected to assume a part-time role if it’s required for the sake of raising a child.

We have seen virtually no change. Short-term fixes are being thrown at this issue, but there is a real need for further development and more senior roles for women.

The reluctance of men to even take paternity leave reinforces this theory, and the fact that men are already more likely to be the higher earner also means that it makes sense from a financial perspective for them to be the ones that remain in full-time work.

Flexible working absolutely has its place in the modern workplace. But businesses that offer it as an initiative need to ensure they value and develop part-time workers as much as full-time counterparts if they are to address their gender pay gap discrepancies.

So where does this leave us?

As mentioned earlier, we have seen virtually no change. Short-term fixes are being thrown at this issue, but there is a real need for further development and more senior roles for women.

There are some organisations that believe various forms of diversity training will help to fix their gender pay gaps. Indeed, in the action plans published last year by the FTSE 100, 50% of organisations indicated that they were going to run unconscious bias training.

In reality though, a general unconscious bias course is extremely unlikely to have any impact on the gender gap. Leaders and managers need to be trained specifically on areas such as bias around pay and recruitment – with initiatives such as live bias reviews during appraisal and bonus seasons, for example – if the goal is to improve their gender pay gap figures.

Instead, there are more immediate, tangible results that organisations can take. Based on the data that we have seen over the last year, I would like to see organisations focusing their efforts on diversifying their lateral hires and creating programmes that increase promotion rates for talented women, while ensuring retention of women at senior levels.

Organisations also need to ensure they are conducting bias reviews of their appraisal and talent decisions and succession plans.

These are actions that all organisations can take – if they are truly willing to act. And it’s with efforts such as these that I believe we will start to see a more meaningful change than we have observed this year.

Interested in this topic? Read 'Disappointing gender pay gap results: it’s time for a fundamental cultural shift.'

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