Employers are increasingly expected to publish clear action plans to tackle their gender pay gap. So, what makes a good plan?
It has been mandatory since 2017 for UK companies with over 250 employees to report their gender pay gap figures at the end of every financial year. According to analysis by the Chartered Institute of Personnel and Development (CIPD), in 2021/22 the overall median gender pay gap was 9.8%*. This means that for every £1 earned by a man, a woman was paid 90p. This figure has hardly moved since 2017, and indeed in the construction, education, and finance and insurance sectors pay gaps can be more than 20%. Despite the breadth of these gaps, it is still only voluntary for employers to publish an “action plan” or any meaningful analysis alongside their data.
If you research the gender pay gap at a company, you will usually find a standardised set of percentages, pie-charts and bar-charts, possibly together with a link to “What this employer says about their gender pay gap” – but when you click on this you will often get much less clear results. You might find a detailed plan about how a company plans to tackle its gender pay gap, or you might find a general statement about diversity, but with no set targets or timeframes to monitor success. The likelihood is that you won’t find anything at all.
The CIPD and some campaign groups have been calling for pay gap action plans to be made mandatory. Either way, employers need to know that their staff, investors and job-seekers increasingly care about the issue and expect to see a solid plan to bring about equity in pay. “Organisations say that their gender pay gap report is often more downloaded or read than their CEO pay gap report,” says Charles Cotton a pay specialist at the CIPD.
Employers need to find out exactly where the imbalances are within the organisation by drilling down into their pay gap data. By analysing the data by roles, teams, or locations, companies can see patterns and identify issues. “[Companies will] need to break the data down in a more granular way,” says Catriona Aldridge, an employment lawyer and partner at international law firm CMS, who has advised companies on equal pay issues and gender pay gap reporting.
Employers should also carry out further research by talking to their staff. “You can learn a lot from [your] employees in terms of understanding why staff might be leaving or why people might not be attracted to the industry or that particular employer,” Aldridge says.
Ideally a company’s action plan should then cover what happens in every department of the organisation and in every aspect of a woman’s career.
“One-off initiatives won’t work, because addressing the gender pay gap has to be a part of a whole culture change,” says Dawn Moore, Group People and Communications Director at J Murphy & Sons. “[in the construction sector] we do see a lot of very well-intentioned one-off initiatives, but I think the companies that will be really successful will have a joined-up cultural change plan for the whole organisation.”
Moreover, Moore explains how a good action plan needs to consider a wide range of issues, from maternity policies, to practical issues like providing PPE designed for women, as well as “how it feels to work here”. J Murphy & Sons has a median gender pay gap of 24.6%. Its action plan references existing measures – such as the maternity returner bonus – and upcoming measures, such as inclusion workshops being more widely rolled out for all staff.
Lack of women in highly-paid senior roles is a major cause of gender pay gaps across all sectors. In its latest report, Lloyds Bank have set a target for women to be half of its senior posts by 2025. The target of women making up over a quarter of statutory professors and over a third of associate professors by 2029 has been set by Oxford University. The university publishes its progress towards such targets each annually.
For those employers uncomfortable with targets, another possible way to reduce pay inequality and help to address the gender pay gap is to increase pay for staff in lower-paid roles. Oxford University increased pay for everyone in its three lowest pay-grades in 2020, almost 60% of which is made up of women. This resulted in its median gender pay gap falling from 13.7% to 11.1% over the last four years. Last year Costa Coffee increased hourly pay for cafe staff, more that two-thirds of which are women.
Some companies now publish a plan each year to address the gender pay gap along with their pay data, but many reports list initiatives without actually analysing them or considering how to measure their impact. On the other hand, diversity and inclusion projects often only show results in the medium, rather than longer, term. However, after four years of gender pay gap reporting, is now is a good time to start reflecting on what is working and what isn’t?
Says Moore: “Some reports include a lot of great ideas – but then they haven’t really impacted on [the companies’] gender pay gap. I think probably the next phase is for companies to properly evaluate which initiatives have worked since this all started in 2017, and which haven’t.”
*NB Gender pay gap data includes figures for median hourly pay and mean hourly pay. Median hourly pay takes all workers’ pay into account and reports the number in the middle of that range – the median gender pay gap is the difference between women’s and men’s median hourly pay. Mean hourly pay is the average hourly pay – the mean gender pay gap is the difference between women’s and men’s mean hourly pay.