While the Governments’ consultation ‘Closing the Gender Pay gap’ is a welcomed one, the solution doesn’t solely lie in analysing and managing pay, says Mercer.

The consultancy states that the issue is one that can only be solved through a combined approach to diversity culture, talent management and pay.

The consultation is soliciting views on how to implement the section 78 of the 2010 Equalities Act that reserved the right to require all organisations over 250 employees to publish information on the gender pay gap. How this is defined will be critical to understanding what organisations need to do.

According to Chris Charman, principal in Mercer’s Talent business,  “In our view, the pay gap is as much to do with lower numbers of women in more senior roles as it is about women being paid less for the same work. Companies that are serious about improving diversity and eliminating the gender pay gap need to understand that pay is only one part of the equation.

“Companies should revisit their approach to promotion and hiring as much as their pay system to ensure that women and men should be represented more equally in all job functions and levels. To make this happen effectively the business needs to have a proper culture of diversity and inclusion. For too long these different elements of the business have not worked close enough together for this one aim. We hope the Government’s statement will galvanise businesses and their HR departments into action.”

According to Mercer, there are three elements to eliminating the gender pay gap and creating a diverse workforce:

  • Talent: Companies need to ensure that they have policies and working practices in place that attract, retain, develop and promote all employees ensuring that women remain in the workforce throughout their career
  • Reward: Companies should evaluate compensation structures and performance rewards to ensure they don’t penalise those who work part-time or flexibly thus exacerbating the pay gap
  • Culture: Companies need to create a culture of inclusion,  win the business case for change and embedded robust measurement on diversity

Mark Quinn, Mercer’s market business leader for talent in the UK, says:

“At Mercer, we believe the definition is a technical matter and that businesses should embrace the compelling evidence for diversity in improving business performance and innovation. Gender equality and diversity in the workforce is essential in improving UK plc’s productivity. We welcome this consultation and will be submitting a more formal response in due course.”