Zara Nanu MBE, CEO and co-founder of pay equity specialists Gapsquare, part of XpertHR, outlines the state of equal pay in the UK, the opportunities it represents, and the challenges facing employees at all levels of an organisation.

There are many reasons closing the pay gap between men and women is the ‘right’ thing to do.

Apart from the self-evident injustice of paying one colleague less than another by virtue of their gender, companies that strive to implement pay equity enjoy a significant competitive advantage.

This takes the form of enhanced productivity, greater retention, the improved reputation that comes with demonstrating a commitment to environmental, social, and governance (ESG), higher morale, reduced legal bills, and more.

The state of equality

The UK has limited legislation which allows organisations to do the bare minimum to tackle pay parity. Under the Equality Act 2010, employers must not pay an employee less because of their gender, as well as other ‘protected characteristics’ such as disability, race, religion, or sexual orientation.

UK law also states that any employer with 250 or more employees must report data about their gender pay gap – the difference between the average pay of men and women in an organisation – or face legal action and fines.

The truth is men are still paid more than women, around nine in 10 organisations (87.5%) reported a mean hourly pay gap in favour of males for 2022 according to the latest analysis from Gapsquare.

There are some signs of improvement, though. Major companies that have significantly reduced pay gaps include Tata Consultancy Services, WM Morrison Supermarkets, PricewaterhouseCoopers Services, Greggs, DHL, and NHS Professionals.

However, a perception gap remains. Earlier this year, XpertHR with Executive Networks published a global research report entitled 2023 Pay Equity and Transparency: Actionable Insights for a Fair Future of Work. It revealed a massive disparity between the views of HR professionals and executives and the way employees perceive the priority their organisations place on achieving pay equity.

When asked if pay equity was a priority in their organisation, 74 percent of HR leaders and 75 percent of business leaders said yes – but just 47 percent of employees agreed. So what’s steps should businesses take to make real progress on pay equity which they can demonstrate to their people?

Who implements change?

The issue of pay equity should align across all levels of an entire organisation, not just fall to an HR department.

It must be a priority at the executive level. Employers cannot expect to drive progress towards equity without holding leadership accountable for implementing change.

With the CEO taking ownership of the issue, pay equity is more likely to stay at the forefront of business activity.

While this ownership process can take time, at Gapsquare we recommend these initial steps:

• Ensure leaders understand your organisation’s pay philosophy and are prepared to articulate it to their teams in a respectful environment.
• Treat pay equity as the business priority it is and hold all leaders and owners accountable for progress.
• As employee needs evolve and as the social landscape continues to change, ensure pay equity is not treated as a box-ticking activity. Equity is not something to be achieved once and forgotten, it must be a core philosophy where progress is continually monitored.

Speak up for pay justice

Consistent messaging about the long-term financial impact of pay equity and transparency from leadership can also help to demonstrate an organisation’s commitment to the issue.

Employee Resource Groups (ERGs) are an important tool for pay equity communication. These can be used as a safe channel for employees to provide feedback and concerns or report any perceived pay inequities to leadership. Other solutions include employee pulse surveys, which can be a great source of feedback on pay equity efforts.

However, it is essential that leadership communicates these results to the workforce to demonstrate that employee feedback is valued, before taking action on the findings.

Creating an environment where there is clear communication on how pay equity is being handled will allow leaders to have effective conversations on the topic and ensure organisations can retain and attract talent.

All data is not created equal

Broadly, HR leaders’ pay equity efforts are often hindered by limited data access and outdated analytical tools. Expanding on this further, data from the XpertHR and Executive Networks study shows that 35 percent of HR leaders lack pay data when conducting pay analysis, which poses as a challenge to effective pay analysis.

That’s because the use of data can be used to quickly and simply identify the root causes of pay inequities and effectively tackle them.

Continual investment in data analysis is therefore vital. Building efficiencies in data collection can allow organisations to shift their focus from data collection to planning and actioning pay policies, such as greater pay transparency, while developing new policies and benefits. This includes forward-thinking approaches, such as better parental leave policies to help further address gender pay gaps in their company.

Frequent pay audits are another vital method of highlighting any inequities in pay philosophy and acting quickly to eliminate discrepancies. Regularly collecting and reviewing pay data helps to hold organisations accountable and ensures pay equity remains a business priority by illustrating any gains or losses through activity.

The fact that companies like Lloyds Banking Group, British Airways, HBOS, Barclays Bank UK, Aldi Stores, and Next Retail, have all worsened their pay gap demonstrates the inherent difficulties related to achieving pay equality. Without clear systems and practices in place, it’s incredibly hard to make progress.

Simply acknowledging a pay gap exists is only the first step. For organisations to unlock the measurable benefits of pay parity, they need to first bring employee perceptions into alignment with leadership priorities.

With one in three (32%) of parents now saying that the rising cost of childcare has made it unaffordable for them to continue their career, achieving pay equality is now even more of a priority – otherwise we risk driving talented and experienced colleagues out of the workforce.

Organisations can no longer afford to short-change their pay equity strategy – or their people.

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Zara Nanu MBE, CEO and co-founder of pay equity specialists Gapsquare.

 

 

 

 

Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.