Gender Pay Gap – three things for businesses of any size to consider

Legally, the reporting of the Gender Pay Gap (“GPG”) is only required by companies that have 250 or more employees who are based in England, Scotland or Wales. However, there are some important lessons for all organisations in respect of remuneration and the issue of divergence on gender pay can become an issue for any commercial enterprise.

Here are three points to consider with the passing of the second anniversary of reporting on the GPG.

1. Every company will have a GPG
Unless you have exactly the same number of people of each gender at each of the levels within your organisation, it is a mathematical certainty that you will have a GPG inside your organisation, based on the way that the reporting model is constructed.

Nonetheless, establishing your GPG – and then analysing it in order to understand how it has come about – is likely to be the most productive first step that an organisation can take to review its recruitment and promotion policies.

2. “Blind recruitment” may not be the answer
There is a notion that, either consciously or unconsciously, people tend to hire people in their own image . In order to overcome the first hurdle to this – getting a more diverse range of candidates through the initial CV vetting process – some firms have started using “blind” copies. These are documents which remove any trace of a person’s gender, or indeed any other area of diversity which may be from the subject of bias.

However, whilst there is some superficial logic to this, a number of studies, most notably a high profile one undertaken in Australia (see here for coverage**), indicates that this method does not always deliver the intended outcomes.

In our experience, better recruitment can come from identifying the core values of the business itself and then using these as guiding principles to develop and establish everything from recruitment processes to bonus and incentive structures. Given that values are not gender specific, using this approach has the advantage of making the recruitment process fairer to all.

3. Pay gaps may really be rewarding certain characteristics
Whilst some GPGs (or even part of a GPG) may be explained by “structural” differences, such as the number of people of each gender at each level of the organisation, among people who do similar jobs, the difference may not be so much about gender but may instead reflect varying individual skill-sets.

Discretionary pay awards might favour the most skilled negotiators but, whilst it would not be appropriate to ‘punish’ those who have strong negotiating skills, it would be appropriate to consider whether people who are hired for a different set of skills might need a different approach to their remuneration. There may be short term gains from supressing the remuneration levels of ‘quieter’ employees, but such an approach often leads to growing resentment and can become self-defeating. Once resentment over remuneration takes hold, it can lead to people making a “no way back” decision to leave a company for new pastures. It may, therefore, be more cost-effective for remuneration policy to take account of a person’s skill-set and motivators, as well as their job role.

For further information or to discuss any questions you may have, contact Stuart James.

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