Let’s begin with a quick history lesson. After the success of the Davies Review into women on boards – a coalition government initiative pushing for 25% of the boards of FTSE 100 companies to be made up of women – the Hampton-Alexander Review was launched with the target of women holding 33% of board positions in FTSE 350 companies.
As I pointed out during the Davies Review, these targets were largely accomplished using a small pool of female non-executive directors sitting on multiple boards, rather than appointing women to senior executive director roles. In Norway, where 40% women on boards is enshrined in law, they call this phenomenon the Golden Skirts.
My point is that whenever a government tries to create change, the finest minds in the affected organisations will find a loophole that maintains the status quo. So, when the government announced they would be introducing gender pay gap reporting, I was completely unsurprised to see several large organisations outsource reception and cleaning contractors. The low paid, almost entirely female workers in those roles would have dramatically skewed their results. So, they were removed from the balance sheet.
As we know, the root causes of the gender pay gap are primarily social and cultural factors rather than ‘big bad bosses’. Childcare and caring responsibilities fall overwhelmingly on women, forcing them to make a choice between career or family that men rarely must make. The nature of pregnancy and post-partum recovery means that the vast majority of women neither can nor wish to return straight to work after giving birth.
I’ve also argued before that, unless racists are diligent enough to identify which part of the Indian subcontinent someone is from before discriminating against them, a purely bias-based explanation for the race pay gap doesn’t make sense. The difference in outcomes between Indian workers and Pakistani and Bangladeshi workers is too significant. The same applies to a lesser extent between Black African workers and Black Caribbean workers.
So once again, we must consider that culture and individual choice contribute to the race pay gap. In a multicultural society, should we be pushing monocultural values on work and the pursuit of money? If anything, the demand for hybrid and homeworking suggests that the dominant pre-pandemic working culture is being rejected by increasing numbers from all backgrounds.
DELIVERING ON DATA
In my view this means there will always be race and gender pay gaps. The alternative is to overrule women’s choices to spend time with and nurture their children by forcing them back to work. Or to forcibly replace family and community values with individualism.
But acknowledging that there likely will always be some level of pay gap doesn’t mean accepting the status quo. We wouldn’t accept the existence of external factors as an excuse for not taking action on internal factors in any other area of our organisations.
It’s our responsibility as HR professionals to identify discrepancies and anomalies in our workforces. The amount of information at our disposal means new skills are crucial for HR – we’re now data analysts, modellers and scientists. Make no mistake, the HR professional of 2030 will be just as proficient with SQL and Python as they are with appraisals and redundancy.
The data we already hold on our workforces is more than sufficient to identify specific issues on pay gaps, down to department and even team level. But of course, without the will to make change, change won’t happen. As I mentioned earlier, change is resisted. Loopholes will be found to avoid making widespread change.
FIRST STEPS
Help employees explore the issues that contribute to pay gaps with our Gender Pay Gap Fact Sheet.
PROBLEM SOLVED?
A US study published in the Journal of Applied Psychology looked at 1,500 companies across 20 years, and found female senior managers under a female CEO earnt 16% less than female senior managers under a male CEO. The authors concluded that the presence of a female CEO resulted in gender diversity being marked as ‘done’, and the incentive to retain and promote other women into senior roles is removed.
This tick box approach to diversity is of concern in relation to pay gaps. We’ve seen that if a loophole can be found, it’ll be taken. Public reporting incentivises organisations to remove the issue (by outsourcing low paid roles) rather than doing the desired action of equalising the gender split at all pay grades. Why worry about recruiting and developing women for top executive positions when you can simply add a ‘Golden Skirt’ to your board.
We have to think in the medium to long term. If it takes 15 to 20 years for someone to reach a senior position then we’re currently seeing the outcomes of initiatives launched in the early noughties.
Large organisations will already have sufficient data to assess their actions over this time frame. Smaller ones may not. What we can’t do is fall back into the trap of launching an initiative and replacing it after two or three years, when clearly it’s only impacting a tiny proportion of an employee’s lifecycle.
And this links in with the short-termism of the modern career in general. With many employees moving employer to progress to higher roles rather than internal promotions, it raises the question of who is responsible at all? With individualism driving career moves, should the question of development also rest with the individual? What incentive does an employer have to promote groups with pay gaps, if they’re simply providing a springboard to their next role? Only diversity as a public relations exercise, which is the same incentive that leads to organisations with a female CEO ticking the box of gender diversity and marking it complete.
TAKING ACTION
So what can you do?
ONE
Resolve what we control. Whilst many pay gap factors are out of our hands, there’s still plenty we can do. De-biasing processes might not be headline grabbing, but it has a long-term effect.
TWO
Targets not quotas. But more specifically, targets that have buy-in from senior leaders. If you force an organisation to do something, it’ll find a way to meet the letter of the law without actually achieving the intent or spirit. Targets represent an ambition rather than an obligation. Targets driven by senior leaders, who have a disproportionate influence on organisational culture, are far more likely to achieve their intended goals.
THREE
Get to grips with data. Advanced data skills are like gold dust in the HR world, but are normalised in other business areas. The ability to spot trends and patterns in your datasets allows you to target and focus your policies and initiatives, removes guesswork and allows you to quantify your impact. HR has long been seen as lacking the business nous of other departments, but proper use of data will quickly change this image.
NEXT STEPS
Use our International Women’s Day Fact Sheet to share some important facts about how misogyny and sexism still exist today.
