Executive Pay Matters - UK

When the U.K.’s new gender pay gap reporting regulations were published, many commented the measures were crude. To reward professionals, the details did not appear well thought through. I agreed. Now, I admit my admiration. They are smart. They do exactly what the U.K. Government intended.

The prompt to the new regulations was government concern about too few women at senior levels and too many women in lower paid roles. This is exactly what the hourly pay gap statistic reflect. A higher proportion of men at senior levels drives up the average hourly pay number for men and a higher proportion of women in lower paying roles drives down the average hourly pay figure for women – so the gap between these increases.

Fair pay infographic - Its about progession

Over the last few months, we have worked through the calculations with companies of different sizes and sectors. When we are asked by leadership what is driving a gap – the common answer is the relative distribution of men and women up and down and across the organisation. The next question is how to close the gap. This disclosure is driving far greater leadership focus on initiatives to recruit and progress female talent. As the disclosure is annual, there is built in accountability to employees on delivering the initiatives. The U.K. Government wanted more action and we are seeing this. Crude or genius?

Our fortnightly client briefings Executive Pay Matters - UK on the gender pay gap disclosures have a tally sheet on the most common activities that FTSE100 companies are reporting to reduce the gap.

Table showing the fair pay actions being taken by FTSE 100
Sample of gender pay gap disclosures have a tally sheet; as of 25 January 2018

One key weakness to the gender pay gap is its name. The understandable assumption is that it is the same as an equal pay gap. A communication challenge is explaining to leaders, employees and the press the difference and exactly what the gender pay numbers represent. Each fortnight we are highlighting the best communication examples in our briefing. The current holder of our communications cup is John Lewis. Have a look at the John Lewis Gender Pay Gap report 2017 if you are still unclear of the difference and how the numbers are calculated.

What is clear from reports such as these is that while the U.K. Government introduced the regulations to encourage companies to do more to ensure female and make talent reach their potential, companies are not holding themselves accountable to government but to their own employees. They are going beyond the legal requirements to explain to their employees any gaps and what they are doing about them. Crude or genius?