Saturday 23 June 2018

Avoid being tripped up by gender pay gap

'Countries across the world are grappling with this issue.'
'Countries across the world are grappling with this issue.'

Helen McCarthy

Many eyebrows were raised recently when it emerged that Claire Foy, star of Netflix drama The Crown, was paid less than her co-star Matt Smith, despite playing the lead role.

Although the salaries involved in high-profile cases such as this are beyond the imaginations of most workers, female or male, this surprising revelation reflects the reality in ordinary workplaces across the world: women are often paid less than men.

Claire Foy received less money that her male co-star in The Crown – and other examples of the gender pay gap are still evident in many industries.
Claire Foy received less money that her male co-star in The Crown – and other examples of the gender pay gap are still evident in many industries.

The reasons behind the gender pay gap are many and complex. Whilst it's apparent that lack of career progression for women is central to this issue, unconscious bias based on cultural attitudes about the roles of men and women in society can also impact corporate pay programmes.

Countries across the world are grappling with this issue. While for decades it has been illegal in most western countries to pay people differently for doing the same job because of gender, Iceland recently became the first country in the world to legally enforce equal pay.

Closer to home, mandatory gender pay gap reporting legislation was introduced in Britain in 2017. The British legislation required organisations with more than 250 employees to submit their first report in April of this year. The reported data indicates that, on average, 77pc of employers pay men more than women, giving rise to a median gender pay gap of 9.3pc.

However, the gap in some industries is much wider than this. Technology firms operating in the UK reported a median gap of 20.6pc whilst financial services firms reported a gap of 24.6pc.

The figures across the board also show that only 39pc of females are in the upper pay quartile in their company (18pc in technology and 30pc in financial services), whereas women make up 54pc of those in the lower pay quartile.

It's now expected that legislation similar to that in Britain will be introduced in Ireland by the end of this year. Indeed, draft legislation could be brought before the Oireachtas before the summer recess.

How are Irish companies faring in the absence of any legislation?

The European Commission reported in 2014 that Ireland had an average gender pay gap of 13.9pc. This compared relatively favourably with the EU average of 16.7pc. But it's not all good news: female representation on publicly-listed companies in Ireland stands at just 13.2pc of board members, compared with an EU average of 21.2pc, also according to the Commission.

The Mercer 2018 Ireland Gender Pay Gap Snapshot Survey looked to find out more, polling 67 organisations employing over 110,000 people in Ireland. The results showed a mixed picture when it comes to companies' attitudes to, and preparedness for, mandatory gender pay gap reporting.

On the positive side, the survey found that most Irish companies agree with the principle of gender pay gap reporting: 74pc are in favour, and 67pc believe it would have a positive impact.

However, 67pc of businesses are concerned about the potential negative reputational impact of mandatory disclosures and a third fear they will underperform relative to Ireland's average gender pay gap.

Perhaps not surprisingly, half of the businesses surveyed worry about the cost of addressing pay differentials. This may be one reason why the research also revealed a surprising lack of preparedness by companies in Ireland in addressing gender pay differentials: a staggering 70pc of companies surveyed said they had yet to explore whether any gender bias existed in their pay programmes and less than half planned to conduct an equal pay audit in the next 18 months.

Our survey reveals that organisations in Ireland are very worried about the potential reputational impact to their business in the event of mandatory reporting in Ireland. This in turn is sparking different conversations about diversity, inclusion, talent and pay, which is to be welcomed. However, it is concerning that a large majority of companies have taken no action to discover whether gender bias exists in their pay programmes. Clearly, much work remains to be done.

How can Irish businesses begin to tackle such a complicated issue?

Companies that wish to redress the balance and embrace the benefits of a more diverse workforce need to look beyond pay alone. They can start by conducting a pay gap analysis and an equal pay audit to uncover the underlying reasons for any possible gender pay gap in their organisation. But they should also review their diversity and inclusion strategies and benchmark these against local and international best practice.

Mercer recommends that employers who are serious about addressing the gender pay gap - and about embracing the business benefits of a more diverse workforce - should start by taking the following steps:

- Conduct an equal pay audit and review policies in order to address any identified pay gaps;

- Review pay and bonus programmes to test for gender bias;

- Examine career progression and inclusion for women and promote greater flexibility to support sustained change;

- Benchmark diversity and inclusion policies against best practice to create the right environment for everyone to succeed in the organisation.

Clearly, Irish employers have a lot of work to do to address gender pay disparity, but the payoff can be great. By looking at long-term causes of the gender pay gap, Irish employers can become more competitive - and play a critical role in creating a more equitable society for all.

Helen McCarthy, Senior HR Strategy Consultant at Mercer

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