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Clare Parkinson from Croner explains why it is in employers’ interests to explain what they are doing to address any gender pay gaps in their organisation.
With four in 10 private companies announcing year-on-year gender pay gap increases, it could be argued that some view publishing the annual report as purely cosmetic and of little consequence.
Currently, the reporting requirements do not place any legal obligations upon employers to close the gap, or even to justify why one exists within their company so why should employers care about the gender pay gap? Clare Parkinson, pay and reward expert at HR consultancy Croner discusses.
Firstly, if a business has a high mean gender pay gap, female employees within an organisation may be concerned that they will not have the same opportunities to progress as their male colleagues, which can lead to them becoming demoralised in their role and, potentially, seeking employment elsewhere.
Replacing employees that a company has invested time and money in can be a costly process, with the new member of staff likely requiring varied levels of training before they are at the same level as their predecessor.
If a company can actively demonstrate that they are taking steps to work against the gap it can encourage positive working, increased productivity and improved output. It can also reassure any employees who are thinking of starting a family that they will be supported by their employer, helping to avoid them taking prolonged career breaks to facilitate child care and therefore not depriving the company of an otherwise valued member of staff.
The gap can also discourage external candidates from applying for positions within a company. It is becoming increasingly apparent that, in the modern workforce, employees are drawn towards roles which offer the potential for progression and development and they may be deterred from submitting an application if they believe that they would have increased opportunities in another role. For example, in October 2018 the Equality and Human Rights Commission revealed 58% of women asked would be less likely to recommend their employment to others if there was a clear gender pay gap. By promoting progression opportunities for women, companies can improve their overall reputation within their sector. This can also assist in encouraging women towards sectors with a traditionally male environment, such as the construction industry.
Finally, it should be remembered that all employers in the private sector with over 250 employees are still legally obliged to submit their annual report as normal by no later than 5 April 2019. Public sector employers need to do so by no later than 30 March 2019. By encouraging heightened workplace diversity, companies can work to maintain a workforce that is well placed to understand the needs of its customers and interact with a broader client base.