Gender pay gap reporting: Don’t leave room for misinterpretation

The legal obligations for gender pay gap reporting are
pretty straight forward. You simply need to publish six figures. These are your:

1.    
Mean gender pay gap

2.    
Median gender pay gap

3.    
Mean bonus gender pay gap

4.    
Median bonus gender pay gap

5.    
Proportion of males and females receiving a
bonus payment

6.    
Proportion of males and females in each quartile
band

And you’ve got until April 5 next year to do it, or slightly
sooner if you are in the public sector (March 31).

How could this possibly cause you a headache?

Well, when you start thinking about the potential impact from
publishing the figures you quickly realise there could be numerous
consequences.

What does good look
like?

The first thing most people are asking is whether their figures
will look comparatively good – or, not as the case might be. The truth is we
don’t know what good looks like right now. We also don’t know how other
organisations will present their findings or what mitigation they may provide.

However, organisations have been told (not asked) to publish
these figures because gender pay gaps exist. The government wants this exposed to
encourage organisations to take action.

Differences in pay may not be evident when men and women first
enter the workforce but income levels do tend to differ as employees pursue
their individual career paths. There may be a variety of justifiable reasons
why a gap develops between men and women but the size of that gap may surprise
you when you look at the averages.

Who will take notice?

The second thing to think about is who will pay attention to
those averages? There are clearly groups with a vested interest, such as lobbyists
and politicians. They will be eager to inspect the numbers and highlight any
perceived inequalities.  

Closer to home, your organisation’s employees will want to
compare their income with the average. This is bound to have an impact on how
valued they feel by their employer. As these figures will be published on
company websites, there are also providing a very visible measurement for
potential new recruits, who will look at these statistics when making a
judgement on which companies they might like to work for.

We need to consider what all these people going to think
when they look at those crude averages.

Scope for
misinterpretation

There isn’t any requirement to provide additional commentary,
but without it there is huge scope for the figures to be taken out of context.
A high gender pay gap could easily be interpreted to mean that a company has
gender pay inequality issues – when that may not be the case at all.

These figures do not take into consideration the composition
of the workforce or the nature of the jobs being performed. They are averages across
the whole workforce – not a direct comparison between two people performing the
same or similar jobs. A failure to provide any explanation as to why a gender
pay gap exists in your organisation would, however, leave people to draw their
own conclusions.

Controlling the
narrative

What’s clear is that if an organisation is going to tell the
story behind the headline figures, they will have to conduct a more detailed
level of analysis. They will need to go way beyond what they are legally
obliged to provide.

In doing so, however, companies will gain a better understanding
of what is truly happening within their organisation. The results will either
help them to justify their current pay policies or help them realise that a
problem might exist.

If the latter is true, organisations will still have time to
take the actions required to rectify the issue before the deadline for
publication arrives next year. And come March or April, when their figures go
public and they come under scrutiny, organisations can be on the front foot when
it comes to offering an explanation, highlighting what has already been done to
tackle the problem and outlining their future plan of action.