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What your SME needs to know about the gender pay gap

16th October 2018 By Guest Contributor in Current Affairs

2018 marks the 100th anniversary of the suffragette movement and our 2017/18 Annual Review celebrates all of the female entrepreneurs we have helped with finance over the last 15 years. Our friends at Sage have provided a guest blog explaining what the gender pay gap is and what small organisations can do to address any imbalances in their own organisations. 

Since April 2018, all employers with 250 employees or more are required to publish their gender pay gap data every year. But, what actually is the gender pay gap, what can we do to address any imbalance and what does it mean for small and medium-sized enterprises (SMEs)?

What is the gender pay gap?

The gender pay gap refers to the average amount of money men and women earn in the workplace on an hourly basis.

The difference in the gender pay gap reflects how many men hold higher-paid positions in comparison to women.

 

What is the difference between gender pay gap and equal pay?

The gender pay gap is not to be confused with equal pay, which refers to the legal requirement that men and women must be paid the same amount for similar work.

Originally the Equal Pay Act 1970 this has since been replaced by the Equality Act 2010.

 

Why is there a gender pay gap?

The difference in the amount of money that men and women earn cannot be attributed to one distinct factor. However, the predominant reasons for a disparity are generally considered to be:

  • The male domination of higher-paid sectors such as science, technology, engineering and maths (STEM) together with law and finance
  • A male dominance in more senior roles
  • More women working part time and taking time out for maternity leave and care responsibilities
  • Stereotypes within the workplace, cultures that lead to a conscious or unconscious bias against women.

 

Why do employers have to publish their data?

The reason that a company has to report their data is to help identify any gaps between men and women in the workforce with a view to understanding why they exist and identifying any issues that are causing the gap.

The legislation is not predominantly about discrimination but is about taking positive action.

For example:

If women are working in more part-time roles, then flexible working hours or remote-working opportunities would help to support the external commitments that women may have.

Or, offering more support to women in lower-level positions with training opportunities and encouragement for managerial and mentorship for director roles could address an imbalance.

“Gender pay gap reporting is an incredibly important step forward, because if companies are transparent about gender pay and the root causes behind any gap, they can find the solutions they need to build businesses that work for their employees and reflect the communities they serve.” – Helen Rose, chief operating officer, TSB


What should employers publish and when?

All companies with 250 or more employees (on the snapshot date) must complete and submit their gender pay gap data.

This includes employers in:

Private sector and listed companies
Voluntary sector
The public sector

The snapshot dates are:

31 March for public sector employers
4 April for private and voluntary sector employers

The data that must be gathered for reporting is outlined here

Required gender pay gap data is reported here

If you are legally bound to report your gender pay gap data and don’t, then you are liable to enforcement action from the Equality and Human Rights Commission, outlined here

 

Is the gender pay gap getting bigger or smaller?

Historically, the Office for National Statistics (ONS) has also recorded gender pay gap information by gathering data from the Annual Survey of Hours and Earnings (ASHE), which is a survey of individual employee pay. It differs from the government portal figures as it includes all employers and not just those with 250 or more employees.

The figures from the ONS report a national gender pay gap of 18.4% (2017).

Figures recorded by ASHE show that since 1997, the gender pay gap is getting smaller. In 1997, the pay gap for all employees was 27.5% and that has reduced to 18.4% for latest figures recorded in 2017.

 

How do I calculate my gender pay gap?

A company with more than 250 employees is legally obligated to report their full gender pay gap data, including:

 

mean gender pay gap in hourly pay
median gender pay gap in hourly pay
mean bonus gender pay gap
median bonus gender pay gap
proportion of males and females receiving a bonus payment
proportion of males and females in each pay quartile
 
A full explanation of which employees are included/excluded in the reporting can be found here.
 
A detailed guide which explains how to calculate each of the figures above can be found here.
 
If you are a small employer (fewer than 250 employees) and are not duty bound to report, then you can still submit an official report or you can measure your pay gap to benefit from identifying any gaps in your organisation.
 

 

"If you are a small employer (fewer than 250 employees) and are not duty bound to report, then you can still submit an official report or you can measure your pay gap to benefit from identifying any gaps in your organisation." 

To do so, simply calculate and compare the median hourly rate for men and women as illustrated in the infographic below.

 

 

I have identified a gender pay gap, now what can I do?

Ask yourself the following questions:

What is the gender balance of senior and junior roles?
Could we employ more women in senior roles?
Can we employ more men in junior or part-time roles?
Could we offer other benefits such as flexible working?
How can we appeal to new employees in a gender-neutral way?
Is our bonus structure gender neutral?
Should we voluntarily disclose our gender pay gap?
 

As a small or medium-sized business, what can I do?

Although the focus and scrutiny of the new gender pay gap reporting is on large and high-profile employers this shouldn’t be a signal for SMEs to dismiss the legislation as being not relevant to them.

 
A business of any size should be considering their gender pay gap and addressing what could be done in their organisation to ensure equality.
 
By choosing to have clarity and to report your gender pay gap regardless of your size, this can send a positive and clear signal that you are a progressive company who wants to ensure the best working environment.
 

Positive steps that an SME can take to ensure an environment where anyone can progress regardless of gender include:

Unconscious bias
 
Being aware of any subconscious bias towards gender is the first step to shining a light on discrimination and inequality in the workplace.
 
Tackle outdated stereotypes about women head on and instead cultivate an environment where women and men are seen as equal and that no glass ceilings exist.
 
Managers and decision makers should receive training to ensure they don’t hold any unconscious bias during either interviews, promotion selection or salary review.
 
Also, consider how seemingly innocent comments or jokes could contribute to an overall culture of stereotyping. It’s often what we consider the ‘harmless’ things that are normalised and which create the biggest problems.
  
Flexible working

A contributory factor to women taking part-time roles is often that they have commitments outside of the workplace, which means they cannot attend a fixed place of work during a traditional nine-to-five, Monday to Friday scenario.

By offering flexibility as to when and where work is completed, this can help to be inclusive to women who are managing a family and/or elderly parents.
 
Childcare
 
If a company is in a position to offer childcare for employees, this can have a significant impact on helping those with parental responsibilities and can create a more equal opportunity environment for those that have children, against those that don’t.
 
If you have a business that is location dependent, then considering how you can alleviate childcare responsibilities can open up more opportunity for parents to progress.
 
In the UK, there are two million people not working because they are looking after children or a home and 89% of these are women. (Government Equalities Office)
 
Leadership training
 
Ensure women are encouraged into management and senior roles and any subconscious gender opinions are set aside when considering employees for advancement within the company.
 
By offering leadership training and mentorship, this can help to support women (and men) who may have ability but who lack the confidence to put themselves forwards to progress.
 
Encourage women to apply for non-traditional roles
 
For businesses in historically male dominated sectors, such as STEM, construction, law and finance, a company can actively run female-oriented advertising and encourage applications from women.
 
Also, there is the opportunity to take positive steps to dispel future stereotyping of roles. This can include holding seminars and talks in education or job fairs to encourage the coming generations to see roles as gender neutral and empower girls and women with the knowledge that their applications into all sectors will be welcomed.
 
A car dealership could offer to deliver a talk at a school to encourage girls to consider a career as a mechanic, for example, or a construction firm could offer work placements to girls and encourage them to pursue a career in engineering.
 
“Executives must understand that their companies can’t be successful on a global platform if they don’t have a diverse and inclusive workforce. Being diverse means you have the benefit of an increased talent pool to recruit from. If you have a narrow recruitment focus, you may miss out on some of the best talent available.” – Sheila Flavell, Chief Operating Officer, FDM
 

What are the benefits of promoting gender equality?

By being a progressive gender pay gap neutral company, you can become a more attractive business to new employees and attract top talent.
 
A business is built on a foundation of its employees and people that are valued will be more productive, more creative and will be a better representation to both clients and customers.
 
Gender pay gap equality is not just good for the women in employment, it’s also good for business.
 
According to the Government Equalities Office, the benefits of gender diversity filter across all areas of business, including reputation, recruitment, retention and resources. So, why wait until you’re a 250 strong team? Start benefiting now by following the advice above. 

 

You can find more information and the original blog upon which this post is based over on Sage's own site, here.

 

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