How to tackle the pay gaps in your business

It’s the CBI’s 2019 Annual Conference, and a panel of diversity and inclusion experts have come together to talk about how businesses can approach their pay. The session, sponsored by Hays, looked at how businesses need to collect data on diversity and use it to understand the barriers and challenges that people face in the workplace. With the third round of gender pay gap reporting in April 2020 and the likelihood of ethnicity pay gap reporting coming into force soon, it is clear there is no silver bullet to approaching the challenge of closing pay gaps. 

We were joined by: Yvonne Smyth, Group Head of Diversity and Inclusion at Hays; Sarah Churchman OBE, Director, Chief Inclusion, Community & Wellbeing Officer at pwc; Denise Wilson OBE, Chief Executive of the Hampton-Alexander Review; Claire England, Director of Diversity and Inclusion at JLL; and Lewis Iwu, CEO and Co-Founder of Purpose Union. Find out what they had to say. 

Transparency drives accountability 

Reporting on diversity has come a long way since it first started in 2011, when it examined the number of women on boards. Gender pay gap reporting followed in 2017 and now, with the general election on the horizon, different parties are making commitments to reporting on diversity areas such as disability and LGBT+. 

PwC introduced ethnicity pay gap reporting alongside their gender pay gap reporting in 2017, because for Sarah Churchman, “we’ve always been transparent because it drives accountability” – no one wants to hear numbers that are worse than the year before. For many organisations, reporting beyond gender will not be straightforward because employees do not have to disclose information – such as their sexual orientation or their ethnicity – with their employers. Churchman continues: “I now realise that we were quite lucky because 90% of our employees have shared their ethnicity origin with us… It’s all about building an organisation with enough trust that people will share their personal data with you – such as their ethnicity or sexual orientation.” 

A recent Hays report, highlighted by Yvonne Smyth, found that 69% of people would share their data if it helped to make workplaces more inclusive and fair – so there is hope.

The spotlight has started the conversation 

The panel agreed that, while pay gap reporting might be a blunt instrument, it has played an important role in starting real conversations about change. There is a shared consensus that this is a topic on everyone’s agendas. But the next step for business is to interrogate the data to identify the reasons behind the numbers.

Taking it seriously is the only way  

Denise Wilson from the Alexander-Hamilton Review set out that the real difference between those companies making progress and those stagnating was simple: effort. “This is not a side issue and you can’t treat it like one. You have to have a proper budget. You must have senior leadership – you must have someone on the board who’s responsible for it. You have to lift the lid on every single people process in your organisation right the way down. Fundamentally it has to be a big business project, a multi-year project. And it needs everybody to step up and play their part. It’s becoming clear that there’s a gulf opening up between those who take it seriously and those who treat it is a side project. Taking it seriously is the only way to make real progress.” 

So what are the tangible actions business can take? 

More women are needed in senior roles 

Wilson of the Hampton-Alexander Review argues that “most companies’ gender pay is influenced by a lack of women in senior jobs,” which is problematic, because women in leadership are fundamental to closing the gender pay gap. While every company is different and needs to tackle their gap in ways unique to their own context, unless women are in leadership roles, the change is unlikely to happen.  

The Hampton-Alexander review is an independent body with a purpose of increasing the number of women on FTSE 350 boards. Tracking over 23,000 leadership roles, they are working towards a target of 33% representation of women on FTSE 350 Boards and FTSE 350 Executive Committee and the Direct Reports to Executive Committee by the end of 2020. The UK is currently tracking at 30% - so good progress has been made – but Wilson asks whether this progress has been quick enough. Businesses need to look at the reasons women are not in senior roles. Claire England from JLL shared that her organisation identified a leaky pipeline of female talent as one of their key barriers – and identifying these barriers enabled JLL to take measures to overcome them. 

Your story is important for setting the tone 

“There’s a climate of expectation and awareness,” says Smythe from Hays. “To not take action - to not take this seriously - is a considerable business risk.” Which is why it’s unsurprising that 58% of respondents in a recent report from Hays said that understanding a company’s approach to diversity and inclusion before deciding to apply for a job was important to them. What is more surprising – especially given the recent focus from business on closing pay gaps – is that 62% of respondents said they found it hard or very hard to find that information anywhere on a company’s website. “Lots is being done, lots of activity is underway, and I have no doubt it is being threaded through many day-to-day activities – but it’s not being signposted.”  

Lewis Iwu from Purpose Union builds: “If you look at millennials or gen Z, it’s clear that employees as a whole – not just women or those from BAME communities – care about diversity and inclusion.” There’s a sense of frustration that change isn’t happening quickly enough, but with a new generation of employees hungry for change, it’s clear just how important it is for your corporate story to reflect your organisation’s activities and commitments. 

Panellists also discussed the need to proactively use inclusive language and imagery, to visibly demonstrate their openness to candidates from all backgrounds and build an inclusive employer brand. Smyth also made a plea for name-blind recruitment to improve trust in employer brands; removing the name from the recruitment process would improve confidence in seven out of 10 female and eight out of 10 BAME candidates, for instance. 

Businesses need to be more comfortable talking about race 

“People are still fundamentally uncomfortable talking about ethnicity,” says Iwu from Purpose Union. “Businesses don’t even have the language to describe the people they are trying to help.” According to Iwu, an open conversation about ethnicity and how it can impact someone’s experience of the workplace must happen, and those in charge must start to tackle difficult questions they’ve never personally had to encounter – from micro aggressions to whether a dress code impacts someone from a particular cultural background. “We need to have a meeting of minds where we say that it’s OK to call something out as long as you’re respectful. I was speaking to a group of BAME individuals about their careers, and they felt they wanted to leave and start up their own companies because they did not feel comfortable where they worked.”  

Engrain practical questions to help your business 

“When your business is making decisions, you can engrain tangible, practical questions to help you make better, more inclusive decisions,” according to England. Questions like: who else could be at this table? Who else could give us a different perspective on this issue? 

Understand your people 

When it comes to understanding your people, it’s clear that the mix of quantitative and qualitative is key. Knowing the make-up of your workforce can drive great decisions. “We have 85% millennials, so we are not going to change them, they are changing us!” says Churchman of pwc. “If you are going to attract people because of their difference, you have to create cultures where you benefit from that difference, and where all types of difference are included.” But data can only take you so far. To understand how other people experience your culture – you need to speak to people and ask them the question, and really give them the space and the focus to understand the reasons why they may not feel entirely comfortable. 

Game changers 

The panellists closed the session by sharing their top ‘game changing’ tips that your business could put into practice today to start closing your pay gaps:  

• Lewis Iwu, Purpose Union: “Talk openly about why people might not feel part of a culture” 

• Yvonne Smyth, Hays: “Flexible and agile working at point of hire” 
• Denise Wilson, Hampton-Alexander Review: “The appointment rate for senior leadership – 66% of all FTSE350 board appointments still go to men” and “the data being visible so people can make choices based on their values” 
• Sarah Churchman, pwc: “Reverse mentoring – people don’t know what they don’t know – pair your senior execs up with junior people” 
• Claire England, JLL: “Leadership is the game changer. Leaders can prioritise diversity and inclusion to be as important as revenue generation – and they can drive behaviour change.” 

This session was sponsored by Hays:

Ahead of the potential introduction of ethnicity pay gap reporting, the CBI is also working hard to prepare guidance for members on how to tackle your ethnicity pay gap. Keep an eye on our Diversity and Inclusion page on Ideas Forum in 2020 for the latest updates.

If your business is already implementing innovations to close your ethnicity pay gap, we’d love to hear from you and share your story as part of our guide. Get in touch.

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