Episode 124: Discover the implications of the new gender pay gap reporting legislation and the impact it could have on organisations, employees and HR
While the quantitative measures in gender pay gap reporting help to reveal the scale of the gender earnings differential, they do not explain your context or causes, or explain any actions you have been/are planning to take on closing any gaps. Writing a narrative report allows the opportunity to showcase your organisation. When crafting your story, it should be based on a multi-faceted approach, showing deep-rooted thinking about the context, causes and actions.
The CIPD has worked jointly with the Chartered Institute of Payroll Professions in creating this webcast for CIPD members, to help provide you with information to help you:
- manage internal and external stakeholders who have a vested interest in the narrative
- identify the key messages for your audience
- conduct a risk analysis and gain sign off for mitigation from key stakeholders
- consider what 'good' looks like for your organisation, by viewing examples of good narratives for a range of organisations and industries
- aim to write your story in less than 750 words, but we accept that in some circumstances the story may need to be longer
- Agree and develop a communications plan to support getting the narrative out to your intended audiences
In this webcast we discuss the value and benefits of the narrative report to the business, such as:
- providing an opportunity for the business to attract and retain employees based on their plans to reduce their gender gap
- conveying a positive statement of intent to shareholders/external and internal stakeholders
- helping build reputation and brand
- gaining engagement from stakeholders (internal and external)
- showcasing the business
Read the transcript
Helen Hargreaves: Hello and welcome to the Gender Pay Gap Narrative reporting webcast. My name’s Helen Hargreaves and I'm the associate director of Policy and Membership with the CIPP.
Evan Davidge: Hello I'm Evan Davidge, an associate personal reward tutor and consultant for the CIPD.
HH: Over the last few weeks the differences in pay between gender has scarcely been out of the news, what with the BBC publishing the pay of their highest paid staff and just recently the figures from the Office for National Statistics showed that the overall gender pay gap rose marginally from 18.2% in 2016 to 18.4% in 2017. The gap for full-time workers though has fallen to a record low of 9.1% which is down from 9.4% in previous years. The UK is one of the first countries in the world to require gender pay gap reporting and it’s a key part of the government’s work to eliminate the gender pay gap.
So what is Gender Pay Gap Reporting? Well first let’s make sure we understand what it’s not. It’s not equal pay. Equal pay is a like-for-like comparison or measure of equal pay for equal or similar work. And that was introduced way back in the Equal Pay Act of 1970 and then it was brought across into the Equality Act of 2010. And the idea of reporting the gender pay was introduced in the Equality Act of 2010, which provided for future legislation that would require mandatory gender pay gap reporting in the private and voluntary sector.
But what’s this reporting that we’re talking about? Well it’s basically a mathematical indicator of gender differences in pay across an organisation. So once a year, on a given date, employers with more than 250 workers will need to look at what their employees have been paid on that one particular day. That's called the snapshot date. And then they breakdown this information by gender. That is what the males are paid and what females are paid on that one particular date.
Accompanying the actual figures themselves employers must give a written statement and that written statement has to include a declaration that the information supplied is correct. But it also gives employers the opportunity to provide a narrative, setting the context for their results.
Now we all know that nothing is ever as straightforward as it seems so let’s get the complicated bits out of the way up front.
The Equality Act 2010 applies to the private and voluntary sector in Great Britain, but Northern Ireland isn’t part of Great Britain, it’s part of the UK but not Great Britain. So remember if you have any workers in Northern Ireland you must make sure that you don't include them when you’re working out your figures and your results.
Northern Ireland’s got its own Gender Pay Gap Reporting requirements and they’re being handled differently.
The Equality Act 2010’s specific duties regulations 2011 is the regulation which covers the public sector and that requires certain public bodies with over 250 employees to publish workforce diversity data.
So seeing that we’ve got these two separate pieces of legislation, one covering the voluntary and private sector and one covering the public sector, well it’s only to be expected that there will be two different snapshot dates and therefore reporting dates.
So the 5th April 2017 is the snapshot date upon which gender pay figures should be reported for the private and voluntary sector. That’s for employers with more than 250 employees. But it’s the 31st March 2017 for public sector organisations. And then for each there are 12 months within which they can gather all the information together and publish those figures. So it will be a deadline for publishing of 4th April 2018 for the private sector and 30th March 2018 for the public sector.
ED: It’s important to emphasise here that gender pay gaps are symptoms of wider structural, cultural and employment conditions, all of which have a direct or indirect effect on diversity and inclusion. For example, a number of studies have identified that the uneven distribution of jobs between men and women, especially at senior levels is key to maintenance of gender disparities. Another example could be conscious or unconscious bias in recruitment, performance management, promotions and talent spotting which inhibit the inclusion, opportunities and progression of women. Just to dwell a bit more on promotion as a prime example, a candidate field should be representative of the gender mix of that cohort otherwise the process could be seen as biased and even discriminatory.
And there would be negative cultural perceptions of flexible working and its career-limiting consequences which research shows affects women disproportionately, particularly those who have caring responsibilities. So when crafting your story it should be based on a multifaceted approach showing deep-rooted thinking about the context, causes and actions.
HH: But remember what you are reporting are facts, you are giving a breakdown of the pay of your employees on a particular date. But you’re also given an opportunity to provide that supporting information, to tell your story, perhaps explaining why your results are as they are and what, if any, action the business intends to take to address the gap. And remember it might be that there are understandable reasons for the gap in pay between genders.
To give you an idea of what I mean by that, as a very stereotypical example, think of the fire service, it might be, and of course I don't know because I'm stereotyping here, but it might be that most, if not all of firefighters in one area are male. And it might be that the support staff at the fire station are mainly, though not necessarily all, female. It’s entirely possible that the firefighters get paid more than the support staff and the supporting statement would explain that. And it’s possible that the employers might feel that it’s not necessarily a gap that they want to do anything about, or that they can do anything about.
So by the end of this content, by the end of the webcast, you'll have the information that will help you to first of all identify who all your stakeholders are and then manage the internal and the external stakeholders who have got a vested interest in the story that you need to tell. It will help you identify the key messages for your audience and go through a risk analysis so that you can start to identify any risks that there are from publishing that information. And then gain sign-off for that mitigation from those key stakeholders.
You should be able to start looking at what “good” looks like for your organisation by looking at examples of some good narratives from a range of organisations and industries who have already published their results.
Aim to write your story in less than 750 words, but we do know that in some circumstances that story might need to be longer. And then what you need to do is talk to your communications team. You need to agree and plan how you are going to communicate the messages that your results have generated. And then you need to know how to get the support to get that narrative out to your intended audiences.
ED: This session will cover the business benefits and stakeholder mapping required. We won't go into stakeholder analysis but show the stakeholder mapping so that delegates are able to see the ways of working with each stakeholder group. We’re also focused on being honest and open with stakeholders. It’s important to understand the “who”, “why”, “what” and “when” for stakeholder management for gender pay gap reporting as you would for any project of this magnitude and we’ll cover this in more detail shortly.
Here it is important to point out that an opportunity will be lost if narratives are confined to minimum statutory disclosures without identifying the causes and actions being taken to close gender pay gaps. The gender pay gap should be seen as a business imperative, not just a compliance requirement.
So, to put that into context what is the value of the narrative report to the business? We will discuss benefits such as a chance for the business to attract and retain employees, based on their plans to reduce their gender pay gap; a positive statement of intent to shareholders [sic], external and internal stakeholders; reputation and brand-building; and engagement from stakeholders, again both internal and external; and finally showcasing the business or providing some form of shop window on the type of culture and diversity in your organisation.
The counterproductive approach is to blame pay gaps on the system or so-called ‘unavoidables’, and signposting readers to a labyrinth of website links and ambiguous policies. It’s important to be simple, open and transparent.
Let’s turn now to the stakeholder mapping, which is an important step to understand your key stakeholders and using a technique such as the two-dimensional grid here to assess their level of interest and influence. This process helps to shape the communication approach and messaging for each stakeholder group using a form of segmentation.
Let’s just explore a couple of those stakeholders. The most important one that comes to mind of course is the employee. Now it’s quite interesting when you look at the two-dimensional grid here, as you will see the vertical axis demonstrates influence and the horizontal axis the degree of interest. So if you were to plot your employees in one of those quadrants you will probably think about putting them in the bottom right-hand corner, the ‘keep informed’ quadrant. They will be interested but will have little influence. However, in some organisations where the employee voice is part and parcel of your engagement strategy you could argue that employees could be in the top left-hand quadrant, i.e. ‘keep satisfied’. So I think it’s important to bear in mind the particular culture that you may have where you place employees.
Taking TU, trade union that is, or employee representatives, I think it’s fair to say most of them would fit within the top right-hand quadrant which is around ‘managing closely’, because they have both a high degree of influence and a high degree of interest.
I don't think it really matters which quadrant you put your key stakeholders in, the important thing really is to assess the interest of those stakeholders to make sure that they can be addressed in the gender pay reporting.
So what is different really should be the new answers and the messages and to what stages you interact with those stakeholders.
HH: Now we want to talk about what the data can mean in terms of the key messages, for example, recruitment, promotions, talent, diversity and inclusion etc. Where does the gap narrow or widen through the employee journey and at what level within the business department or specialist area? And why does this happen?
Look for evidence to support your findings, for example you might have lower female representation at senior management or executive levels or in higher paid roles. What’s the organisation planning to do or perhaps not if we think back to the example that I gave earlier on about the fire service? So, are they going to do something to address the gaps, planning meetings, programmes, networks, support mechanisms, agile working etc. or not?
So in summary what we want to be looking at in this next section is what does your data tell you? Why is there a gap? How will you address the gap? Will you be addressing the gap, for example, football clubs they might again have a similar sort of situation to the fire service? Do you have executive or board level sponsorship? When are you going to start publishing your results, (you've got that 12 months in which to do it)? What is, ultimately, going to be your goals? If you’ve got an action plan what are your deadlines that you're going to put in? And how are you going to measure the progress of these goals that you've set for yourself?
ED: Now let’s look closely at the six key areas to work on. The first one obviously, what are the gaps? Have they been properly calculated in accordance with the guidelines and independently verified? It is of critical importance to get the numbers right. For example has all full pay relevant employee data been captured along with the correct pay elements? And the referenced pay periods, whether they're weekly, fortnightly or monthly paid employees? Also have you collected the right information on bonus pay, paid to each full pay relevant employee during the pay period?
I think the important thing is we can't really get into detail with this particular webcast into some of the technicalities as to what actually constitutes a relevant employee. It goes far beyond reviewing our pay bands so it’s about looking deeper into exactly where and why a gender pay gap exists.
Some of the most common areas to consider include recruitment practices, salary negotiations, bonus awards, promotion decisions, support for returners, options for flexible working, organisational culture and so on.
Action plans need to be realistic to manage expectations, for example, sponsoring women in leadership; removing bias from recruitment and promotions; supporting working parents, particularly in terms of maternity, shared parental leave and flexible working; and managing the talent pipeline.
The point I need to make at this stage is that pay alone will not address the gap. Some influences on the gender pay gap will be beyond the immediate control of an employer. For example, there may be insufficient girls with STEM or scientific, engineering and mathematical qualifications leading to graduate intake gender imbalances, especially in high tech organisations. In mitigation growing internal gender talent pipeline will take several years.
It’s important to set targets within given constraints. Set out medium and long-term goals but include stepping stones and quick wins. If you can get those capability steps in place and show you’re moving in the right direction it will appease your stakeholders.
Apart from high level statutory disclosures other internal analytics applicable to gender pay should be produced to provide an aggregated picture. For example, recruitment splits; promotions, are they representative of the field; succession planning; talent management; and a real deep dive analysis of your pay bonus distributions. Look closely at employee attitude surveys to show what your people are telling you. These should be reported to business leaders at agreed intervals using an appropriate dashboard and supporting narrative.
Here we will talk through the need to assess the risk to the business of the messages that come out from your report and to consider again the stakeholder interest.
If your data reveals a large gender pay gap this may have an impact on brand and reputation. In KPMG’s 2016 Think Future research, for example, 55% of women polled said that the sector’s reputation on gender equality would influence their decision about working in it.
Similarly a large gender pay gap will also have a negative impact on employee morale, motivation and retention. After all who wants to work for an organisation where not everyone has the same chance to reach their full potential?
A large gender pay gap can also look unappealing to your customers and other stakeholders, especially if ethical values and behaviours are an important part of your brand story.
So, like any other risk analysis, risks and issues need to be identified along with their degree of probability and severity with the mitigating actions. For instance the cost of closing a gender pay gap needs to be balanced against the risks incurred with attrition, recruitment challenges, lost productivity and customer flight. A properly conducted risk analysis should identify the key issues and priorities for closing the gender pay gap.
On a positive note gender pay gap reporting can be an opportunity to address an important issue that is often overlooked in the day to day running of the business. This goes far beyond reviewing your pay bands or introducing pay transparency. It’s about looking deeper into exactly where and why a gender pay gap exists.
HH: So now we want to look at what “good” looks like. What is a good narrative? And so we’re going to have some example case studies to talk through. We’re not being prescriptive about the template because every narrative will be different for every organisation but there are some key tips that you can pick up from these narratives and that can then help you when you start to write your own story.
Think of your narrative as being your shop window so don't just pay lip service along the lines of ‘Well we are where we are!’ it’s not going to be well received by internal or external stakeholders unless the causes are properly explained and there's a clear statement of intent to redress the gender pay gap in that narrative.
ED: Right let’s focus then on the six case studies in these next two slides. These are early submission on the government UK’s gender pay reporting website. I’d like to emphasise right from the outset though that there are no prizes for being an early submitter of your gender pay report. The most critical thing to bear in mind is that the report should not be put into the public domain until it has been fully positioned and communicated to your internal stakeholders. However, what you do need to avoid is leaving the reporting to quite late within the reporting period as it will raise suspicions and be seen merely as a paper exercise. It’s much greater than that and an opportunity will be missed.
So let’s look at the six case studies. There are links going through to the relevant organisations but it will not be practicable in this webcast to click through to them, you can do that in your own time.
So let’s start first of all with Aldermore. This is a very good example of a joined up approach with full board sponsorship and governance led by the chief risk officer. Aldermore are already committed and well on the journey, focusing on improving senior female representation and creating a more inclusive culture.
Next is Cap Gemini. This is a very comprehensive narrative, showcasing major achievements but recognising that they have some way to go in tackling the primary causes.
Cap Gemini clearly highlights the steps being taken to close the gap with astute inclusion of role models to demonstrate a progressive culture of trust, autonomy and world class opportunities to progress within a work/life envelope.
Last on this slide is Deloitte. This is a weighty narrative reflecting the scale of the challenge for a large, complex, professional services organisation, with a highly diversified population. Deloitte sets the right tone in terms of being ahead of the game using its leverage with government and creating an inclusive culture characterised by an agile and flexible work environment. Unsurprisingly the narrative contains judicious use of data, targets and corroborative evidence to demonstrate where the organisation currently stands and where it is going.
The second slide is headed by Fujitsu and this is a well-balanced, straight to the point narrative which shows how the organisation is performing better than the UK and technical industry benchmarks. The report explains the wider differences in the median and mean gap figures due to lower female representation in the upper middle and upper quartiles. They see diversity and inclusion and developing a STEM talent pipeline as key.
Next is Planet Organic, a completely different report altogether, or narrative. A relatively small food retailer with a homogenous workforce which allows for a simpler and succinct narrative. It’s refreshing to see a distinction made at the start of the narrative to distinguish between gender pay gap and equal pay, something which my colleague covered right at the beginning. Content is ethically skewed to align with the organisational values and it’s a very good place to start.
Finally we have Shoosmith; this is the Magic Circle legal firm with very short and succinct narrative – 319 words to be precise, with some nice graphs showing its very favourable gender pay and bonus positions. But Shoosmith are not complacent. Again they see its diversity and inclusion strategy and agile working as key to its future position.
So there you have it, six case studies. There probably are other really good examples of the earliest submitters that are on the government UK website.
I think the main observations you can draw from these case studies is that all the narratives show good foresight, insight, innovation and commitment to action plans, in other words it’s recognised more than a compliance requirement. All the narratives have been endorsed by the most senior people which sends a strong message. Quantity doesn’t necessarily mean quality but it’s interesting that the narrative lengths seem to be influenced by scale, complexity and the degree of challenge to close the gender pay gap.
Diversity and inclusion, agile working and support networking are clearly the key themes.
HH: Using all the information that we’ve given you so far that should help you to start writing your story. Remember there's no need to focus on the numbers, it’s more about the actions that you’re going to take and why and how you’re going to measure the success of those actions. What you need to do is pull together everything that you've heard so far to start using that to write your story.
Once you’ve written your story then you have to start working out how to communicate what is contained in it, what your story is saying.
Before you upload it you need to catch up with the communications team, or if you don't have a communications team and it’s all down to you well then you need to sit down and plan who you need to engage with and pull together all the information to upload your narrative.
The one thing that you must remember is that your gender pay gap report is going to be available publicly, anyone can access it. And the most important ones of those no doubt will be your employees and any trade unions that are recognised by your organisation, they are going to go and have a look.
So what you need to do is take control and decide how you want to communicate your report, first of all how you want to communicate your report internally. Make sure that you engage with your employees, looking at the wider issues of gender pay and diversity.
It’s important that you know you don't have to publish everything because some information could be legally privileged. But what you need to think about is what communication channels you already have, what of your communications work well. Look round at other organisations, see how they’ve done it and pick up ideas and see if you can then incorporate them into your communications plan.
Start thinking about segmenting your key stakeholders, working out what and how those key stakeholders want to know and how you should tell them. Let them have complementary but nuanced messages, messages that are tailored to that particular stakeholder group. Possibly think about having maybe the chief executive or the chief operations officer to open up that communication so it demonstrates how important the organisation is taking this and that you've got commitment right from the very top.
But most of if you do have an internal communications team go to them, let them help you with that communications plan and that content because they are the experts.
And a very, very crucial message is that if there is information in your report that you might think is unfavourable then you might be tempted to start downplaying it, trying to hide that message but if you do that you allow employees, media, trade unions, to start taking control of that narrative. And that can be extremely damaging to your brand. So it’s far better that you own that narrative yourself, you’re tackling the issues or concerns head on so that you can manage how that information is going to be delivered.
ED: Remember gender pay reporting is an opportunity, not just a compliance requirement. Whilst the statutory metrics might be viewed as blunt instruments and not fully representative of an organisation’s pay position, the narrative gives a much deeper insight into gender parity and the type of leadership and culture that prevails.
And remember that your key stakeholders are your employees. They are the eyes, the ears, and mouths of your organisation. And they can do much to enhance or even damage your brand.
So pitched in the right way a narrative could serve both as a valuable recruitment and retention tool which could enhance the brand and reputation of your organisation.
HH: In a speech recently the Prime Minister said, tackling injustices like gender pay gap is part of building a country that works for everyone. And we have to now, this is only the beginning. In that speech the Prime Minister went on to say that she would like organisations to try and close the gender pay gap further.
She would like them to improve the pipeline to ensure progress on female representation at senior levels, including supporting women to progress to middle management and offering return to work schemes. She wants companies to publish the gender pay gap data but including companies that have fewer than 250 employees.
And she also said that she would like organisations to make flexible working a reality for all employees by advertising all jobs as flexible from day one, unless there are solid business reasons not to. And that just shows that this is only the start and it’s best to get ahead of the game now, start planning what you are going to do, what your organisation is going to do, how those messages are going to be communicated.
About the speakers
Evan Davidge has over 30 years’ experience in human resources, where he has mainly specialised in total reward, employee benefits and wellbeing. Following a distinguished career as an RAF officer, he has worked across most sectors in senior HR / reward roles, including financial services, central / local government and professional services.
Evan is a thought leader on a wide range of total reward management topics. In this sphere, he is an accredited trainer and personal tutor for the World at Work Association and the CIPD respectively, where he holds Chartered Member status. He is also a founder member of two consultancies: Reward Consulting Partners and The Wellbeing Leader. Evan has attained an MBA in Business Education Management.
Helen Hargreaves, Associate Director of Policy & Membership
Before joining the CIPP’s Policy team in April 2011, Helen worked for HMRC for 27 years.
For many years she worked in HMRC’s Accounts Office at Shipley, collecting PAYE and Class 1 NIC and reimbursing Statutory Payments to small employers, before moving into Human Resources. An HR manager for four years, Helen also ran the payroll for the Accounts Office staff’s childcare scheme.
In 2004 Helen transferred to the Employer Team in HMRC’s Business Customer Unit, specialising in employer customer understanding, before supporting David Ellis, the Senior Civil Servant responsible for Employer Engagement.
Holding the MSc in Business and Payroll Management through Derby University, Helen’s responsibilities with the CIPP include managing the Policy Team and the CIPP’s Advisory Service. She writes articles for the CIPP magazine as well as external publications, attending consultation forums with different government departments, conducting consultation surveys and submitting responses to the various bodies. She also presents at CIPP and external events keeping payroll practitioners in touch with the latest developments in payroll legislation.