Employers are increasingly expected to publish clear action plans to tackle their gender pay gap. So, what makes a good plan?
When you look up a company’s gender pay gap, you get a standardised set of percentages, pie-charts and bar-charts. You might also get a link called “What this employer says about their gender pay gap” – but when you click on this you will get much patchier results.
Since 2017 in the UK, it has been mandatory for companies with over 250 employees to report their gender pay gap figures at the end of every financial year. The overall median gender pay gap was 9.8% in 2021/22*, meaning that women were paid 90p for every £1 earned by a man, according to analysis by the Chartered Institute of Personnel and Development (CIPD). This figure has barely shifted since 2017. The construction, education, and finance and insurance sectors have gender pay gaps of over 20%.
Yet it is still voluntary for employers to publish “action plans” or analysis alongside their data. When you click on the “What this employer says” link, you might get a detailed report about how a company plans to tackle its gender pay gap. Or you might get a broad statement about diversity on the company’s website, with no targets or timeframes. Or there might not be a link at all.
The CIPD and some campaign groups are calling for action plans to be mandatory. But in any case employers should be aware that their staff, investors and job-seekers increasingly care about this issue and expect to see a solid plan, says Charles Cotton, a pay specialist at the CIPD. “Anecdotally, when I talk to organisations they say their gender pay gap report is often more downloaded or read than their CEO pay gap report,” he says.
So, what makes a good action plan?
Employers should start by drilling down into their pay gap data and finding out exactly where the imbalances are. “[Companies will] need to break the data down in a more granular way,” says Catriona Aldridge, an employment lawyer and partner at international law firm CMS, who has advised companies on gender pay gap reporting and equal pay issues. This might involve breaking down the figures by roles, teams, or locations.
Employers should also conduct qualitative research by talking to their staff. “You can learn a lot from [your] employees in terms of understanding why people might be leaving, why people might not be attracted to the industry in the first place, or that specific employer in the first place,” Aldridge says.
A company’s action plan should then ideally cover what happens in every department and in every aspect of a woman’s career.
“I think one-off initiatives won’t work, because addressing the gender pay gap has to be part of a whole culture change,” says Dawn Moore, group people and communications director at J Murphy & Sons’, a construction and engineering company with around 4,000 employees. “I do see a lot of very well-intentioned one-off initiatives [in the construction sector]. But I think the companies that will be really successful will have a joined-up cultural change plan.”
Moore explains that a good action plan needs to consider everything from maternity policies, to practical issues like providing PPE designed for women, to the less tangible issue of “how it feels to work here”. J Murphy & Sons has a median gender pay gap of 24.6% and its action plan outlines existing measures, such as a maternity returner bonus, and upcoming measures, such as a wider rollout of inclusion workshops for all staff.
Across all sectors, a lack of women in highly-paid senior roles is a major cause of gender pay gaps. Lloyds Bank, in its latest report, set a target to have women in half of its senior roles by 2025. Oxford University’s report set targets for women to make up over a quarter of statutory professors and over a third of associate professors by 2029. The university also publishes its progress towards such targets each year.
Some employers are uncomfortable with targets. But another way to close the gender pay gap and reduce overall pay inequality is to boost pay for staff in lower-paid roles. In 2020 Oxford University increased pay for everyone in its three lowest pay-grades, where women make up almost 60% of workers, and this has contributed to its median gender pay gap falling from 13.7% to 11.1% over the last four years. Costa Coffee increased pay last year for hourly-paid cafe staff, over two-thirds of whom are women.
Some companies now publish a plan every year alongside their gender pay gap data, but many reports simply list initiatives without analysing them. Diversity and inclusion projects often only show results in the medium term. But, after four years of gender pay gap reporting, there might now be enough evidence to start reflecting.
“Some reports talk about a lot of great things – but then it hasn’t really impacted [the companies’] gender pay gap,” says Moore. “So I think probably the next phase of this is for people to really evaluate what’s worked, in terms of what they’ve been doing since this all started in 2017, and what hasn’t.”
*NB Gender pay gap data includes figures for median hourly pay and mean hourly pay. Median hourly pay takes all workers’ pay into account and reports the number in the middle of that range – the median gender pay gap is the difference between women’s and men’s median hourly pay. Mean hourly pay is the average hourly pay – the mean gender pay gap is the difference between women’s and men’s mean hourly pay.