West of England companies leading the way on gender pay gap analysis
Dr Zara Nanu
Under new regulations which came in this year, companies with over 250 employees will have to publish data about their gender pay gap by April 2018. As the discussion grows around why the gender pay gap is still such a pertinent issue for business leaders, so does the confusion about what the numbers mean and what can be done to decrease them.
Over the past year, at Gapsquare we have helped over 70 companies use their payroll and HR data to understand and narrow the gender pay gap. We do that through our automated data based software Gapsquare which includes a free tool for companies.
The reason behind our work is two-fold. Firstly, we are helping businesses comply with the new regulations that require them to report on the gender pay gap annually. Secondly, we are helping businesses make the most of diversity on their growth path. Lowering the gender pay gap and growing a more diverse workforce is proven to increase revenue. For every 10% increase in diversity, there is a 3.5% increase in earnings. Companies that are more diverse also see faster growth into new markets and increased creativity.
We have combined these two reasons into our automated, free software Gapsquare, and below is an outline of some of the key findings that are emerging from the West of England when it comes to running gender pay gap analysis.
Payroll and HR data is at the heart of the new regulations, and yet many companies are finding it difficult to pull data into one single point for the calculations. There are additional levels of complexity as pay data needs to exclude salary sacrifice and overtime, but needs to include benefits such as car allowances if they were taken in cash.
Piece work (ie. Consultancy) also needs to be included in the calculations, and many companies in the West of England are finding this challenging as invoices for this work usually go through the Finance Department rather than Payroll.
- Going beyond the minimum requirements
It is reassuring to see that most of the companies in the West of England are looking to go beyond minimum requirements for gender pay gap analysis. Analysing data such as age, length of service, department, or worked hours can help identify key reasons behind the gender pay gap.
The gender pay gap is often there because of what is known as the motherhood penalty (when women slow down career progression because they take time off to care for their children), slower promotion rates for women, and clustering of women in low paid part time roles. Scrutinising data by age, department or occupation and higher job levels helps companies build robust plans to narrow the gap.
- Ethnicity pay gap
Calculations into ethnicity pay gap are not yet a legal requirement, but several political parties have pledged in their manifestos to make ethnicity pay gap reporting mandatory. Key issues with this is that employers do not necessarily keep ethnicity data for their employees. In addition, the way in which they identify ethnicity differs. The Office for National Statistics (ONS) groups individuals into 19 ethnic groups. These are not necessarily the groups used by many employers.
Companies in the West of England which have used Gapsquare indicate that for non white British women, the gender pay gap is likely to increase by 2 or even 3 times.
On its own, this piece of legislation is not going to make many changes to the gender pay gap. But what it is already doing for many companies in the West of England is getting them to talk about diversity, pay attention to pathways for career progression, recruitment, and mentoring/sponsorship opportunities for women and ethnic minorities. It’s the combination of these actions that will lead to a significant narrowing of the gap.
Zara Nanu is the CEO of Gapsquare, bringing together technology and diversity expertise to help businesses grow an inclusive workforce.