We caught up with Innes Miller, Co-founder and Chief Commercial Officer at paygaps.com, for his views on the second round of gender pay gap reporting.
Paygaps.com helps organisations improve their diversity and gender pay gap performance by providing insights and easy to use resources for organisations to use to analyse and report their pay gap data.
First things first Innes, are you seeing firm’s report earlier and with more accuracy this year?
In short, no. We have tracked reporting figures from this and last year, and of this date in March 2018, 6,666 firms had reported compared to 4,426 firms today. So it is evident that many companies have left in later than last year, most probably due to Brexit and Brexit uncertainty.
There will be an element of strategic reporting too – organisations withholding the publication of their gender pay gap reports, or working with others to issue on the same day. It’s very disappointing when organisations choose to do this though, as they are not taking the legislation seriously and acting as if they have something to hide.
In terms of accuracy, there are still inaccurate reports being issued. I can’t fully comment on this until all the reports are submitted, but based on some of the numbers we’re seeing, organisations are still reporting inaccurately.
Across the board, have you seen gender pay gaps go up, down or stay the same?
So far there has been a marginal 0.3% improvement on the median gender pay gap. The bonus pay gap has seen a much bigger improvement of 20.8%, although this could be because many of the organisations with the highest bonus gaps – such as financial services – are yet to report.
Nevertheless, some companies have realised that their bonus payments are out of alignment through conducting pay reviews. It also highlights the need to get women into more roles that pay high bonuses, such as client service or sales roles traditionally dominated by men.
What factors impact the pay gap within an organisation?
Bonus payment, pipeline and talent management, lateral talent, career paths of males and females to name a few. Organisations need to identify the issues that are preventing women from reaching the upper echelons of their business.
The motherhood penalty – and assumptions around this – are a clear factor too, in which instance, firms need to do the best of their ability to ease the transition of women back into work after maternity leave.
How could gender pay reporting in the UK be improved?
Current legislation could be improved in a number of ways.
Partner pay needs to be added to the legislation. The BEIS committee’s consultation report on the gender pay gap reporting offers some valid recommendations as to why this should be done.
Firms should also have to provide more data around different job levels, similar to the approach taken in Australia. Here employers can choose one of two options ; i) unit level data, or ii) aggregated data which requires a breakdown of job levels for managers and non-managers data. Adopting a similar approach here in the UK would bring greater understanding and transparency around pay gaps.
Organisations should also have to publish their action plans for closing the gap. Although there has been a lot of talk about what businesses are doing internally, publishing an action plan gives something firms can commit to that would result in meaningful change. Each organisation should report their key aims for closing the gap, and have listed the executive(s) accountable in the organisation for doing this. However, this raises the question as to how this would be monitored.
The legal sector is seeing the reporting of other types of pay gap, such as ethnicity, disability and sexuality? Have you seen this trend across any other sectors?
The Big 4 consulting firms are ahead in their reporting of other kinds of pay gaps. For example, they have all reported on ethnicity. But apart from this, the voluntary disclosure of this information has been very limited.
Firms need to recognise the advantage of diversity to better utilise the talent they have, as well as making the business more attractive to diverse talent when considering whether or not to report this data.
In some instances, we have seen the mean hourly pay gap narrow, but the median increase? What does this tell us?
Mean figures are radically impacted upon by outliers, such as senior figures getting remunerated disproportionately, where median figures are more representative of what actually is going on in firms.
A rise in the median suggests a lack of pipeline management across quartiles, most likely a higher number of men in the top quartile who continue to be remunerated highly.
Last year, law firms were lobbied by the Business, Energy and Industrial Strategy (BEIS) Committee to voluntarily include partner pay figures as part of their calculations. Do you feel this is a meaningful step forward?
Reporting partner pay is a meaningful step forward as it gives a better representation of the true gender pay gap within firms. This is not to say it is necessarily an easy or straightforward task, with equity partners paid a share in the firm’s profits and losses and also have their yearly pay amount decided by a remuneration committee.
Saying this, law firms should display leadership and do the right thing in this instance. The government have announced that there is to be no changes to the gender pay gap legislation for 5 years, but continued press and buyer pressure – such as the open letter signed by 170 US GC’s to campaign for greater diversity amongst their legal suppliers – means that there are other good reasons why law firms should report on this.
Many firms are saying that it is going to take a few years for the initiatives they introduced to address their gender pay gap to ‘bed in’. Do you feel that this is a valid response from businesses?
Initiatives will definitely take time to bed in as there is no quick fix to this. There needs to be a lasting commitment from leadership teams to close their gender pay gaps, as these will likely change over before organisations start to see any real progress in narrowing their gaps.
Some organisations have played a numbers game. Some asset managers for example hired female non-executive directors to address their gender pay gap at board level, and to demonstrate to investors they were making progress on the issue. However, a flurry of hiring is only a superficial fix and does not equal long term change and the need for greater equality at all levels in the organisation.
Are there any other trends you have seen with the reporting of this years’ data?
Organisations are still treating gender pay gap reporting as a compliance exercise, rather than seeing it as valid reason to drive positive change within their business. Once organisations realise the importance of being a good organisation to work for and with, only then will we see the numbers really start to change.
Gender pay gap reporting is an opportunity for firms to step back and think about what they are really doing to make an impact. Law firms themselves should also display leadership on this issue, given the fact that they are advising their clients on how to accurately report this data.
 Interview conducted on Thursday 28th March 2019. All statistics correct of that date.