Mind The Gap: HR & The Gender Pay Gap

Transparency is finally here, but why should HR care about closing the Gender Pay Gap?

The Government’s legislative scheme of gender pay gap (GPG) reporting may seem like just another statutory hurdle for HR and payroll professionals; an additional compliance exercise, diverting HR’s energy from adding strategic value.  While it will be legally permissible to simply report on the pay differentials each year, organisations not taking steps to address an identified gap are likely missing out on an attainable competitive advantage, which is backed by substantial research. 

Whilst a gap could be caused by unequal pay practices, a GPG is most commonly a result of women being underrepresented within senior management and above. 

The recent Gender 3000 report by Credit Suisse charted the economic success of more than 3000 companies worldwide.  It found that large organisations with at least one woman on the board financially outperformed those with less gender diversity.  The average increased return on equity investment was 5%.  Further, the McKinsey Global Institute looked at the GPG from a more macro perspective.  Their ‘power of parity’ report concluded that £28 trillion would be added to the global GDP by 2025, if the GPG was closed.  This clearly demonstrates the potential business case for change.

Following studies such as these, a number of top organisations are already taking steps to address and reduce their GPG.  One leading player is Deloitte, who have created a suite of people-focused initiatives underpinned by targets and KPIs.  As part of this, Deloitte offer two schemes for returners after a career break, aimed predominantly at professional women returning to work after having children.  One of which is a 12 week intern programme aimed at increasing the individual confidence of returners; this scheme has a conversion rate (of interns taking permanent roles) of 80%.  Further, their company-wide ‘Time Out Scheme’, enabling all employees to take up to one month’s unpaid leave (in additional to their normal annual leave), which has proven extremely useful to working parents, in particular women, balancing family commitments.

Consequently, forward-thinking HR professionals are not just looking at their GPG, but are seeking to reduce it.  The legislative reporting requirements around GPG are viewed by these HR strategists not as a burden, but as a mechanism for measuring success. In light of the studies detailed above, the message on GPG reporting from HR to its organisation’s directorship should be clear.  While the aims of the new legislation are about transparency, the rational for change is not purely about fairness.  There are sound business reasons to tackle the issue head on and the best organisations are trailblazing in this field.  It is these organisations that are reaping all the employee engagement and talent attraction benefits that go with closing the gap.

MHR’s HR Services team offer consultative support to organisations seeking to build a strategy to reduce their GPG.  Please contact emma.renke@mhr.co.uk to discuss further.

Emma Renke

Emma Renke

Emma Renke is Head of HR Services within MHR’s Managed Services department. Emma is a non-practicing barrister of 8 years call who specialises in employment law and has previously represented clients in the Employment Tribunal and County Court on over 300 occasions. Emma’s specialist interests are discrimination, TUPE and HR strategic change.

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