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Could forcing firms to report on their gender pay gaps backfire?

Written by Frances Dickens on Wednesday, 19 April 2017. Posted in Diversity, People

Frances Dickens explores whether the effect of the new law requiring businesses to publish details of their gender pay gaps will be as progressive as is claimed

Could forcing firms to report on their gender pay gaps backfire?

Anyone who has ever pitched a business idea to an investor will tell you that sometimes the numbers are all that matters. So the fact that, from this month, organisations with more than 250 employees are now required to publish data showing their gender pay gap has the potential to bring about real change on this issue. You can't argue with numbers that present a clear picture of which companies and public bodies are doing well on this front and which are only paying lip service to equality. Or can you?

As someone once said, there are lies, damn lies and statistics. While I applaud the sentiment behind this legislation – and I'm aware that many advocates of true equal pay lobbied hard for this – I'm concerned that the way it has been worded will work against meaningful insight and could actually block progress. This is because organisations will be publishing gender pay gaps worked out as an average across all employees of each gender, so anyone interpreting the data is likely to end up comparing apples with oranges. 

True gender pay parity is all about men and women being paid the same to do the same job. This was brought into UK law with the Equal Pay Act in 1970, after those now famous female machinists at Ford Dagenham insisted they should be paid the same as their male counterparts. The problem these days of course is that many jobs aren't defined as tightly as a machinist at a car factory, making it much easier for women to be paid less than men for jobs that may be the same but defined differently.

In my book the gender pay gap should be counted only by looking at men and women doing the same role. But with the figures calculated as mean averages without roles taken into account, the ‘gap’ may simply be because that company started, for example, with a team of six men and one woman, resulting in them having a higher concentration of women at lower levels. These companies would score badly, not because they undervalue women or they lack opportunity but just through circumstance. Companies operating in the STEM (science, technology, engineering and mathematics) industries are particularly prone to being judged this way, as many of them have relatively few female employees. There's also the fact that many women choose to work part-time after having children. This would also skew the published figures, presenting a picture of gender pay inequality when actually a company could be very progressive in its facilitation of flexible working hours.

The big question now is how potential new recruits will respond to seeing the published figures. If an organisation is shown – fairly or unfairly – to have a large gender pay gap, might this put women off applying to work there? My worry is that this could make it even harder for women to achieve equality in these places, especially those STEM businesses where we really need better gender representation.

Speaking personally, if I was able to join a business with a large gender pay gap at a high enough level to effect change then I would do that. But how much influence would a younger woman realistically have? Should she gamble with her career by working to improve a company that doesn’t fundamentally appreciate her? I would advise anyone to vote with their feet and move into the places that are demonstrably facilitating equality. 

So, to that end, how can these statistics be interpreted without unfairly penalising anyone? The trick may be to look beyond the numbers. Organisations are apparently being encouraged to accompany their published figures with an explanation of the picture they show and how they are working to alter any gaps revealed. I suspect that this narrative will become the really important insight for women working out which companies deserve their loyalty. 

About the Author

Frances Dickens

Frances Dickens

EB cover star Dickens set up Astus Group more than 10 years ago and it is now the UK’s biggest media barter company, working with over 200 major brands and almost all media owners. Frances pioneered a new approach to business through Astus, placing accountability, transparency, integrity and delivery on promises as central values. As an experienced entrepreneur, Frances has strong views on good business practice, including issues of sustainability, equality and the role of government in supporting the business community.

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