Gender pay gap: How effective are ambitious targets?

Organisations are under scrutiny from all sides, including employees, customers and the media, who are expecting them to communicate their action plan on how they intend to tackle pay differences between men and women. As such, many employers have set targets to demonstrate their commitment to closing the gap.

“Setting targets is one initiative to try to secure a reduction in the overall gender pay gaps that employers have published in their first year of compulsory reporting – and it is one of the actions recommended by the Government Equalities Office and the Equality and Human Rights Commission,” comments Duncan Brown, head of HR consultancy at the Institute for Employment Studies.

Yet whilst it’s important for employers to provide analysis of why there is a gender pay gap in their organisation, and then take steps to close it, this increased pressure can lead to some employers setting unrealistic targets that may not be achievable in the long term. This then risks them becoming de-motivating and counterproductive, and could encourage quick fixes rather than genuinely helping to drive real change.

“There are some pretty ambitious targets out there from organisations such as the BBC – at least they seem ambitious to us, given that we’ve been working with employers for many years to address equal pay and gender pay issues, and closing gaps is often not a simple and straightforward issue that one or two initiatives can immediately achieve,” remarks Brown.

A sense of accountability

Clare Rowe, culture and inclusion lead at Deloitte, acknowledges that the gender pay gap in her firm is driven by a lack of women in senior positions, but recognises that meaningful change will take time. In 2012, they set a target that, by 2020, 25% of the partners will be female, and have since agreed a longer-term target of 40% female partners by 2030. Female representation at partner level has since increased from 14% in 2014 to 19% today.

“We believe targets are vital in terms of driving change and fostering a sense of accountability,” she says. “Targets should be stretching but realistic, and progress against them closely monitored and reported. Yet we have been clear that while targets and programmes are important, these interventions aren’t enough to deliver meaningful and sustained change. That’s why we are also focused on our culture and ensuring we provide an inclusive working environment that is underpinned by respect at all times.”

During a recent ‘Women in Technology’ roundtable event, organised by Workingmums.co.uk and hosted by Salesforce, some employers noted that CEOs had set targets that were difficult to achieve because the causes of under-representation were complex and long term. Attendees also agreed that targets were unhelpful and that it was better to have an aspiration or ambition rather than something set in stone.

Aspirations

Charles Cotton, performance and reward adviser at the Chartered Institute of Personnel and Development, believes it’s important to have strong aspirations to try and effect change, and that it may be preferable for employers to have aspirations rather than fixed targets initially, but this is not always the case in the long term.

“Once organisations have a better handle on their gender pay gap figures and what is driving the gap, then after a few years they can start setting more measurable targets. It’s a case of stepping back and looking at why the gap exists and what they can do to reduce it.”

Brown notes that targets can play a useful, supporting role in focusing activity and demonstrating progress in reducing gaps. However, targets are generally a measure rather than a means of securing progress.

“Particularly in the shorter-term, initiatives that have a long-term benefit, such as promoting women into higher-skilled and more professional jobs, can paradoxically act to increase reported gaps as they are often bigger initially in higher-paid roles.

Plus, setting a target is perhaps less important, at least in the early stages, than auditing and assessing an employer’s current data to
understand more fully what is driving the overall gender pay gaps.”

Cotton agrees, adding that the pay gap could be due to people policies within the organisation; societal or policy factors; or how the gap is calculated using the guidance that has been published.

Brown recommends that employers implement multiple initiatives, sustained over a number of years, to effectively close gender pay gaps, including recruitment, training and career development, pay management and flexible working.

He adds: “While HR and equality directors should be ensuring their gender pay gaps, and plans to close them, are regularly discussed and monitored at board level, there are risks that unthinking and over-ambitious targets can become a stick to beat HR with, rather than a measure of progress and stimulus to further success.”

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