Closing the Gap – what works? 

Effective interventions to close the gender pay gap were the subject of two recent government publications. The first, an evidenced based guide for employers produced by the Equalities Office, evaluates a range of employer led solutions for closing the gap. The second, a Commons Committee report looks at the effectiveness of the Gender Pay Gap Regulations, making recommendations for future change.

“What works?”

The Equalities Office published a list of “what works” in terms of reducing the pay gap, by dividing a range of actions into three lists based on their effectiveness. This guide is worth looking at, particularly to determine whether your actions sit in the “what works”, “promising” or “mixed” list and see whether you need to change your approach. The list of “what works” includes:

1. Include multiple women in shortlists for recruitment and promotions
2. Use skills based assessment tasks in recruitment, rather than relying only on interviews
3. Use structured interviews for recruitment and promotions
4. Encourage salary negotiation by showing salary ranges
5. Introduce transparency to promotion, pay and reward processes
6. Appoint diversity managers and or diversity task forces

The promising list included familiar concepts such as offering enhanced shared parental pay and setting internal targets. It was surprising to see unconscious bias on the mixed results list, but in our view that type of training is beneficial for a number of other purposes and prompts wider change beyond closing the pay gap, particularly when undertaken as part of wider diversity measures. At the end of the day, this report was about measuring what works in relation to pay.

BEIS Committee

As part of a wider inquiry into corporate governance and fair pay the Business, Energy and Industrial Strategy (BEIS) Committee recently published a report on the adequacy and effectiveness of the Gender Pay Gap Regulations. This is not the first Committee report to consider gender pay: the Women and Equalities Committee also recently investigated the causes of the gender pay gap. The focus here was on improving the effectiveness of the Regulations and the enforcement process. Like many Committee reports, the majority of the recommendations are unlikely to come into effect, yet are always worth considering to gain insights into future developments in this area.

Key suggestions

The Committee consider that the exclusion of the highest paid people in partnerships makes a nonsense of efforts to understand the scale of reasons behind the pay gap. The report refers to the fact that the mean pay gap figure for PwC was 12% without the inclusion of partners, and 33% with them included. Employers should therefore, the Committee believes, include partners in the pay gap figures. Further they argue the threshold for compliance, which currently sits at 250 employees, should be lowered to 50. According to the evidence smaller employers have larger gaps, and it makes sense to widen the pool of employers to address this.

Further recommendations are made for more granular levels of change within the Regulations, include a move from reporting quartiles to deciles, publication of the part time gender pay gap, and pro-rating bonuses.

Analysis of existing GPG reports

What was particularly striking was the analysis of the official pay gap reports from employers. Less than one third of organisations published a narrative, and less than one fifth set out actions to be taken to close the gap. Consequently the report calls for the mechanics of the reporting process to change, recommending that employers should be required to publish an explanation of the pay gap and an action plan.

Solutions?

The BEIS report repeatedly refers to the need to look towards the long term both in terms of employer solutions and government enforcement options. As the Committee observe, the annual requirement to name and shame employers is unlikely to continue to attract the level of attention it did this year, and will not drive lasting change. In order to close the gap, the report concludes that there needs to be an improved enforcement regime with fines for non-compliance. This seems unlikely in the short term as the Government will no doubt give the existing Regulations time to bed in.

Certainly for employers looking for practical short term solutions, their end-of-summer reading list should include the Equalities Office Guidance. Maybe not quite blockbuster standards, but for those interested in this area, it’s definitely worth a read.

If you want to gain further insights on closing the gap please join our webinar on gender pay gap solutions on 27 September 2018 @1.15. Click here to register.

To find out more about our gender pay gap capabilities and ways in which we can help you please read our gender pay gap brochure.