Articles - The gender pay gap in 2022 and how it affects your ESG score

Since the gender pay gap regulations first came into effect in April 2017, we have seen organisations report their figures with often little or no change in their reported pay gap. In 2021, the fourth year of reporting, that may have become a little embarrassing. This year it is different. The lack of progress could have significant financial consequences. As we head towards the 2022 gender pay gap deadline, what improvements can you make?

 Melissa Blissett, Senior Consultant – Pay Gap Analytics at Barnett Waddingham

 Closing the gender pay gap to improve ESG
 An organisation’s gender pay gap could impact their ESG metrics. This could potentially restrict their ability to tender for work or to access a share of the wall of ESG funding that has been building. Organisations best able to demonstrate an accurate understanding and explanation of their gender pay gap will be viewed as having greater transparency, translating into higher ESG scores. This isn’t something that you can simply pull out of the bag, especially as a supplier, when requirements can change overnight. You need to be on the front foot.

 It is interesting that the gender pay gap is not just about equity and culture. Research has shown that organisations with lower pay gaps outperform others. Investors could take a view that organisations with a high gender imbalance pose greater risk.

 "Research has shown that organisations with lower pay gaps outperform others. Investors could take a view that organisations with a high gender imbalance pose greater risk."

 Empowering women: climate change and the gender gap
 Layer on top COP26 targets and objectives. Given climate change globally is likely to have a more detrimental impact on women than men, it is only reasonable that women should be key players in decision making around policy. Thus it is essential that women are well represented not just at the top of organisations but throughout every layer of a workforce. The purpose of measuring the gender pay gap is exactly that – to assess whether women are progressing through the workforce to the upper hourly pay quartile.

 An organisation's gender pay gap is therefore no longer a tick box compliance exercise that can be buried. Investors, talent and consumers are watching with keen interest.

 Three ways to transform your gender pay gap reporting

 1. Understand whether you have enough data to see the full picture
 Conduct an intersectional view of your data. Different groups of women can experience progression in the workplace differently.

 Know how you benchmark against competitors and your sector, to win the war for talent and safeguard your women from the “Great Resignation”.

 Overlay quantitative pay gap data with qualitative employee insight. Do women in your workforce agree that they have the opportunity to progress at the same pace as men?

 Take a statistical significance test to assess whether gender alone is a significant determinant of pay in your organisation.

 2. Assess whether your narrative is data-led and compelling
 Having a gender pay gap doesn’t automatically mean discrimination is occurring or that an organisation is not supporting the progression of its women. However, this is the simple judgement many third parties may conclude if you report a pay gap. It is therefore critical to have sufficient data insights and to include these within your narrative, to avoid the perception that you don’t “walk the walk."

 Think about your audience. Just under one third of both men and women in our 2021 UK employee survey didn’t believe their employer had an action plan to deal with any gender pay gap and an additional 30-40% of both genders were unsure. The overwhelming take away is that, whilst this is an important workplace issue, communication is not getting through to employees.

 Ensure your communications are accessible to all and reflective of the diverse nature of your target audience.

 3. Don’t get left behind - start planning now for the future
 Government guidance states that, in cases where the employee does not self-identify as either gender, an employer may omit the individual from the gender pay gap calculations. How will you assess the opportunity for progression for this increasing pool of employees?

 We are now seeing ethnicity and disability pay gap reporting becoming mainstream, even though it is not yet regulatory, often within more holistic DE&I statements. Don’t get left behind. Plan how to capture this data and conduct initial assessments to keep pace with competitors and improve your ESG score.  

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