Gender equality: organisations will need to change from top to bottom

Yesterday CIPD launched its new research report on gender diversity in the boardroom at an event in the West End.  There was a lively and thoughtful discussion, especially around the issue of whether some form of statutory quota should be introduced, compelling big companies to appoint a minimum proportion of women to their boards.  This might seem like a bit of a diversion.  As Jo Swinson, Minister for Women and Equalities and Employment Relations, commented, few of us aspire to be on the board of a FTSE100 Board, or a national newspaper editor, or a High Court judge.  However, the diversity (or lack of it) of those at the top of organisations matters to all of us for two reasons.

The first reason is because there is plenty of evidence that diversity among decision-making groups makes a difference to the decisions they take.  A group made up of people with different backgrounds and outlooks approaches problems from a wide set of perspectives and there is less risk of 'group think' - just what you want to avoid in a body charged with making key strategic decisions such as a company board.

The second reason is because it is those with power within organisations who shape its policies, practices and culture - what it's like to work there.  That is why diversity among those in executive positions is so important.  Non-execs aren't going to change a company's culture.

And culture does need to change (even more) if the gap between men and women in pay and opportunities is going to be eradicated.  One set of figures quoted at yesterday's event, taken from a special analysis of the 2013 Annual Survey of Hours and Earnings, helps show where the problems lie (see the chart below).

The chart shows average earnings for men and women by individual age in 2013.  For those in their 20s, the gender pay gap is very small - at age 27, it is just 1.5% - and it stays relatively small into the early 30s.  But then things change.  Average earnings for women peak at age 34, when the gender pay gap is still in single figures at just under 7%.  But the average earnings of women in their late 30s and 40s are on a downwards trend whereas those of men continue to increase during the late 30s and plateau for men in their 40s (with average earnings for men being highest at age 50).

As a result, the gender pay gap widens from 6.9% at age 34 to 30.4% by age 40 and reaches its peak - a massive 44.6% - among those aged 49.  The only compensation for women is that the drop-off in average earnings during the 50s is greater for men than women so the gender gap among those aged 59 - the final age covered by this study - is 28%.

We need to remember that this analysis is a cross-section of people in 2013.  Although women now, on average, have better qualifications than men that was not the case among those born in the 1950s and 1960s - and those women had less support in terms of rights to maternity pay and leave or access to flexible working.  Nevertheless, it shows the impact that having a family has had (and probably still has) on women's careers and their earnings potential.

Another factor that explains the gender pay gap is occupational segregation, the tendency for men and women to cluster in many industries and lines of work (see this note for a more technical discussion).  Horizontal segregation has been the basis of many equal pay claims - on the basis that the jobs mainly done by women have not been paid as highly as those done mainly by men even though they are of equal value.

Gender segregation isn't a historical curiosity from the Made in Dagenham era like the marriage bar.  The chart below presents data going back almost thirty years to the following question:

In your workplace, is your type of job done ...

1. almost exclusively by men

2. mainly by men

3. by a fairly equal mixture of men and women

4. mainly by women

5. or, almost exclusively by women

Back in 1986, 85% of men said their type of work was done mainly or almost exclusively by men and almost no men did 'women's work'.  Women were more likely to say they did work mainly done by men or where there was a fairly equal mixture but over two thirds (68%) still worked in jobs mainly or almost exclusively done by women.

Segregation has declined in the last thirty years as more women have entered the labour force and - one hopes - because recruitment practices and workplace environments have become less exclusive (out with the pin-up boys and girls!).  I suspect part of the change may also be because some heavily segregated industries and occupations (parts of manufacturing, clerical work) have seen extensive job losses due to globalisation and technological change.  Even so, in 2012, more than half of men and women still said their work was mainly or almost exclusively done by people of their own gender.

No doubt many large organisations are alive to the equal pay implications of gender segregation and have taken steps to mitigate the risk of claims, such as comprehensive job evaluation.  Nevertheless, the reluctance of large organisations to publish data on the gender pay gap or reveal the results of equal pay audits could be more than reticence.  And even if the equal pay consequences are being actively managed, gender segregation in the workplace today risks being perpetuated - that's why it's important for both young women and men to have role models in jobs of all kinds.

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