Need to know:
- While organisations are focusing on addressing the gender pay gap, they may be missing some of the underlying discrepancies that exist alongside it.
- Wage differences and the higher likelihood of career breaks among women can influence financial wellbeing and retirement incomes.
- Progression and career development are impacted not only by the predominance of caring responsibilities, but also by unconscious assumptions made by both men and women.
With the second deadline for gender pay gap reporting in the UK having passed, scrutiny is intensifying, and observers are starting to build a picture of the journey of each employer.
However, focusing only on pay might risk missing the underlying drivers of the gap, as well as ignoring other discrepancies between male and female employees that contribute to an overall culture of inequality.
Johanna Beresford, chief executive officer of In Diverse Company, says: “The fact that we in the UK are required to report on this has started to make organisations pay attention to the issue, [but] it only shows part of the picture. [Some] organisations might have a relatively low gender pay gap, but they might still have issues.”
Benefits inequalities
As an example, Beresford notes that while there is widespread awareness of gender inequality at senior and board levels in most organisations, few think about the additional ramifications this might have.
“Private healthcare is often offered at a certain level of seniority, so is likely to be offered in larger proportions to male colleagues,” she explains. “[As are] things like long-term incentive plans and share options.
“Organisations should be looking at the total employment package when they’re thinking about the pay gap and equality, but ultimately what this issue really boils down to is representation.”
Beyond just being more likely to receive certain benefits, unequal representation at the decision-making tier of an organisation might mean that women are not taken into consideration when it comes to what is provided.
“For the most part, [for example,] men are selecting which pensions providers [employees] have the option of putting savings into,” says Beresford. “The same could be said for healthcare options and providers, but the needs of men and women are different.”
Caring responsibilities
A career break for maternity leave has an effect on earnings and progression, while the fact that female employees are more likely to shift to part-time or flexible arrangements can exacerbate the problem.
Employers are increasingly working on equalising parental leave arrangements to facilitate more equality and make sure that women taking on primary caring responsibilities is a choice, rather than a necessity. Sue Macmillan, chief operating officer at Mumsnet, says: “There’s a lot of evidence to suggest that it’s better for dads, better for the child’s development, and for the relationship between the parents.”
This is also a cultural issue, however, and making equal parenting as easy as possible is only part of the process. “The key thing is normalising it and not making it an odd thing to do,” says Macmillan. “Aviva has 67% of new dads taking six months of parental leave. They’ve reached that critical mass; it’s just what you do as a dad there.
“[Employers] that are doing it well would say it’s not just about having a policy and leaving it there, but actually promoting it, showing stories of successful people that have done it, people in senior positions.”
Pensions imbalance
Inevitably, if women continue to take on the primary role in terms of unpaid care work, not only are wages affected, but also the wider factors impacted by pay.
Kate Smith, head of master trust at Aegon, says: “By the time women arrive at age 50 they’ve got half the pension savings of men, but in their 20s it’s about equal,” explains Smith. “Women are taking more time out of the workplace, therefore giving up not only the salary but all the workplace benefits that come with it, including the pension and the employer contribution.
“Employers think about the moment in time, when women are on maternity leave, when they come back, what hours they’re going to work, the here and now, rather than the impact it could have later in life. There’s a knowledge gap there, and we need to educate employers about it.”
Smith notes that organisations should take the time to explain the likely impact of maternity leave on pension savings prior to the employee’s departure, and again upon their return. Nevertheless, shortly after having a child, staff are less likely to have the spare income to pay extra into their pensions, so employers should be realistic and discuss, for example, a plan for five years in the future to redress the balance.
Savings gap
Differences in the financial security of the genders do not stop at retirement income. Nikki Thompson, consultant at Like Minds, says: “It’s still fairly common to see women depicted in the media as frivolous spenders who need to rein it in, rather than as serious potential investors with money to grow and save.
“That sort of signalling from all around us in the media and adverts not only plays into the way the industry views them but also how they view themselves.”
These cultural assumptions, and the fact that financial education and products may not be being pitched effectively at women, might underpin a discrepancy in the level of savings between the genders.
For example, data released by HM Revenue and Customs in April 2019 found that men hold an average of £3,611 more in individual savings accounts (Isas) than women.
The answer, other than wider cultural change, might be to consider segmenting and targeting financial education and communications to specifically engage women. However, it is important to avoid making employees feel targeted or patronised.
“A more progressive and future-proofed approach would be to start blending these issues into existing communications, and making sure that people can get hold of the information easily, but without feeling like they’re being singled out,” says Thompson.
Failure to progress
One of the key factors behind the gender pay gap is the failure to progress women through the talent pipeline effectively. Closing the progression gap should be seen not just as a method of addressing pay issues ahead of reporting deadlines, but an organisational goal in itself.
This, much like the savings gap, is another issue inherently linked to women’s role as primary caregiver, says Andrew Cocks, consultant psychologist at Questback: “Women are more likely to make a trade-off in terms of flexibility and work-life balance, they are less likely to go for the trade-off for more senior, responsible or demanding position.”
However, there are various other factors that limit women’s progression prospects, many of which come in the form of subconscious biases and assumptions on the part of both male and female employees.
Lorna Fitzsimons, co-founder at The Pipeline, says: “There’s an attainment gap: men are promoted for potential and women are promoted for attainment. Boys are socialised to take risks, and not take rejection and failure personally; girls are taught that mistakes are material to their reputation.”
This is not just the remit of traditionally male-dominated industries, either; instead, assumptions based on gender can be particularly insipid in organisations typically seen as progressive.
“Culture is effectively made up of shared assumptions. It’s about recognising those and working to challenge them,” says Cocks. “There’s a paradox of meritocracy, the more [people] believe an organisation is meritocratic, the less [they] scrutinise.”
While many organisations are introducing unconscious bias training, Fitzsimons notes that the attainment gap is not yet part of the curriculum. Add to this the time spent getting back onto a progression trajectory following a break for maternity leave, and employers can start to build a more comprehensive picture of why the talent pipeline might be clogged.
To address this, Mumsnet recently launched a leadership accelerator programme, helping women build the skills and confidence to progress after returning from maternity leave.
Fitzsimons, meanwhile, emphasises the importance of sponsorship: “Nobody gets to the top after the mid-point of an organisation without sponsorship, somebody that advocates for [them] when [they are] not in the room. People confuse sponsorship and mentoring; mentoring is passive, telling you how to do your job, while sponsorship is active and is about your career.”
Flexibility issues
The benefits of flexible working, whether the employee is a parent or not, have been widely reported. However, there are still certain perceptions to be combatted that make it difficult for employees to take full advantage.
“A lot of organisations will give [flexibility] lip service, but particularly in the upper-middle management level, there’s a feeling that working from home is shirking from home,” explains Cocks. “That has to be tempered by an understanding that actually this is good for people, good for business. That fundamentally comes down to a trust issue.”
The issue this creates is twofold, with women who have no choice but to ask for flexible working bearing the brunt of negative assumptions about their commitment and productivity, while men who might want to often feel they cannot ask.
Macmillan notes that there needs to be a fundamental change in how organisations view productivity. This will not just benefit women, but all employees, and ultimately the business itself. “You have to judge people on output. Focusing on results rather than [employees] trying to look busy is going to be better for the bottom line as well,” she explains.
Culture and commitment
Most large employers are taking the opportunity presented by pay gap reporting to make a public commitment to diversity, inclusion and equality; firms such as Clifford Chance have taken this further, voluntarily reporting on statistics such as their ethnicity and disability pay gaps, alongside gender.
All of this shows an encouraging move toward a culture of inclusivity. The danger, however, is that this becomes an exercise in branding brought on by necessity.
“There’s a real gap between what organisations say they are, and the objective observable evidence of what they are,” says Cocks. “It’s potentially damaging to [an organisation’s] corporate reputation.”
Fitzsimons adds: “Rather than the progression of women being an adjunct to the delivery of [the] core business model, it is integral to the delivery of [the] business model. Unless you really get that, you’re always going to have one hand tied behind your back when playing against people who do get it.”
Beyond just focusing on closing the gaps between the genders, Beresford concludes that ideally, this should come as a byproduct of a wider cultural commitment: “How do we ensure we are creating an inclusive culture that means everyone is able to succeed equally, regardless of their background?
“If organisations focus on that as their primary diver and ultimate goal, then it doesn’t matter whether they’re looking at ethnicity, sexuality, age or gender, because it’s about saying ‘we believe in the business benefits of diversity’.”