The challenges of gender pay reporting - six areas of focus

Three years in
The challenges of gender pay reporting – six areas of focus

We are now into year three of gender pay reporting and it’s certainly throwing up some interesting challenges for many of us.  Here’s my thoughts on six key areas of focus based on the work we've done in this area to date:

1. Gett the calculations accurate

An estimated 1 in 6 organisations have errors in their 2018 calculations (Concentra).  This fits with the experience I have had when delving into calculations clients have run previously.   

Although straightforward on the surface, there’s plenty of devil in the detail.  It’s no surprise that the Royal Statistical Society have made ten recommendations urging the government to simplify things.

In the meantime, consider investing in external expertise or specialist software to simplify the whole process. 

2. Treat year on year comparisons with caution

The pay gaps reported on the government website showed on average a 0.1% decrease for April 2018 compared to April 2017.  Not a surprise given many organisations didn’t actually measure their 2017 figures until just before the snapshot date for their 2018 calculations.

It also shows us that there were about as many organisations showing an increased gap, as there were a decreased gap. 

This is why we must treat any data changes with caution.  Small changes are meaningless as it’s just too soon for the data to actually tell us anything at all.  Most interventions needed to improve gender parity are long-term activities. 

We advise clients to take the same caution when interpreting year on year changes at a company level.  These are more likely to be a result of changes in structure, or incumbents in senior roles.

Wait until you have a clear trend over a few years before you celebrate any movement in the figures. 

3. Provide an authentic narrative

The gender pay narrative is an opportunity to showcase your approach to gender parity to customers, employees and investors.  However, 33% have not even provided a link to a report on their website (Paygaps.com), let alone a narrative.

And where a narrative has been provided, many lack authenticity: desperately explaining away the gap by demonstrating there isn’t an equal pay issue, or ‘justifying’ it in some way.  Is this really in the spirit of the regulations?

Publish accurate statistics, and then publish further statistics that highlight the real issues in your organisation.  Use this to craft an authentic narrative with actions rather than justification and PR. 

4. Do extra analysis in a statistically robust way

But publishing additional analysis over and above the regulatory requirements is not without challenge.

One example of this is partnerships where the regulations effectively allow the entire senior tier to be excluded as they are not employees. In some cases, guidelines have been developed on the inclusion of partner data (e.g. the Law Society recommend FTE total cash comparison) but even then the variation in statistical approaches taken varies hugely.

Another example is global organisations wanting to establish a global pay gap. This isn’t as straightforward as converting pay rates to a common FX currency and re-running the figures.  A better approach would be to take a weighted average across the countries, or if a raw data comparison is required, using Purchasing Power of Parity methodology to get to a common FX currency.  

Think carefully about the statistics behind your additional analysis, and where helpful, consider consulting with competitors to establish some common ground rules.

5. Calculate your 2019 figures now

For many, the start of this month marked the deadline for publishing 2018 gender pay gap figures.  But more importantly, it was the snapshot date for calculating our 2019 figures. 

There really is no benefit to delaying this calculation (even if you decide to delay publishing it). 

But, there are many advantages to running the numbers sooner rather than later.  The earlier this is done, the more time you will have to plan and take action, and communicate the messages internally and externally.  

Run your April 2019 figures, and plan the associated communication, now.

6. Focus on smaller actions

The Government Equalities office has conducted an evidence-based review to establish what activities are proven to work when it comes to closing the pay gap.

What struck me was that the activities with mixed results (i.e. not actually proven to work) were common initiatives such as unconscious bias training, diversity training and women only development programmes.

Yet, the actions proven to make a difference include more everyday activities such as skills-based assessments at interview, structured interviews, and transparent salary ranges. 

This is where a data-driven approach can help.  By analysing the data available at discretionary decision points (e.g. application, interview, appraisal, reward, promotion) you can establish exactly where women are adversely affected compared to me in your organisation. This will help guide some of the smaller-scale interventions to address hidden bias.

Plot your employee journey, and analyse the data available for gender bias at each discretionary decision point, as part of your gender pay action plan.

All in all, I think we can safely say that gender pay reporting is much more involved than many originally thought. 

 

At Verditer we make reward more effective.  Talk to us if you'd like support with any aspect of Gender Pay Reporting.

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Photo by JD Hancock