Employers should start measuring gender pay gap

December 16, 2015

Jenny Jones, 10 December 2015

Checklist of suggested action points for HR to follow

For years many senior leaders have found it hard to believe that the UK’s 19.1 per cent gender pay gap is an issue of relevance to their own organisation. This presents both an opportunity and a challenge for the HR profession, and education is a key starting point. But in the meantime compulsory gender pay gap reporting for private and third sector employers with over 250 staff is imminent and regulations explaining how this will work in practise are currently being prepared.

The expression ‘gender pay gap’ is bandied around in the media as if everyone knows exactly what it is and how it is measured when in practise they have little idea. As HR professionals will know, it is a measure of the difference between the average earnings of men and women within an organisation based on a comparison of what men and women get paid for doing the same job. But there are many different ways of measuring the gender pay gap, and no single recognised method. How it is measured can make a big difference to the answer.

The Office of National Statistics measures the gender pay gap by comparing the median hourly earnings of men and women, excluding overtime. The median calculation reflects the mid-point of a range of earnings, and using this method is said to be preferable because there is less distortion by very high or very low earnings than when using a mean average, for example.

Comparisons are usually made between hourly rates as this takes account of the fact that statistically men work more hours on average than women. For the same reason, it is said that bonus and overtime payments should be excluded, although recent reports suggest that bonus payments are likely to be included in the calculation when the regulations are published.

The story an organisation tells when it publishes its gender pay gap will be all-important. As a bald statistic, it may not reflect well on the company unless it is very low indeed, and many people will (erroneously) think it means men are paid more than women to do the same job when usually the imbalance reflects the fact that men occupy more senior and better paid roles than women do.

In a recent Business in the Community survey (pdf) 89 per cent of employees said they would feel more negatively towards their employer if the gender pay gap was relatively large in their organisation. On the contrary, if it was relatively small, 71 per cent would feel more positively towards their employer. This has the potential to be a major talent management and recruitment and retention issue, especially in skill shortage areas.

HR professionals could decide to start measuring the gender pay gap in their own organisation now, even though this is not an easy task and can be a big drain on resources. They may want to try several different gender pay gap measures, for example, comparisons between full-time staff, between part-time staff, a grade by grade analysis, including bonus or excluding bonus and so on. Ultimately these pay and gender measures are about changing culture, and this takes time and energy.

Those HR department that want to start measuring should:

  • make sure colleagues know what the gender pay gap is (and is not) and how the different measures make a difference to the statistic
  • set up a gender pay task-force which includes a statistics whizz, a colleague from finance/payroll, an executive board member (for senior influence), and a legal advisor (to preserve confidentiality)
  • research the gender pay gap in the organisation’s sector and find out where it currently sits in that context, and what work other sector organisations and key competitors are doing on this subject
  • identify some gender champions. Interview prominent women in the organisation who can tell the good news stories about what it’s like as a woman to work for the business
  • publicise the initiatives the organisation is pursuing to recruit women and to support them in developing their careers.

Jenny Jones is a barrister and head of employment at law firm Harrison Clark Rickerbys

Don’t hesitate to call HR180 on 0113 287 8150 if you require any advice on the gender pay gap.


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