Gender pay gap less important than other diversity metrics

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Progress in getting women into leadership roles can actually worsen a firm's pay gap in the short term

Organisations should do more detailed analyses of data beyond their gender pay gaps, according to Jon Terry, diversity and inclusion consulting leader at PwC.

Speaking at a PwC gender pay gap event launching new research on the topic, Terry explained that the “input metrics around getting women promoted are far more important than the gender pay gap”, and called on organisations to be “more sophisticated" with their analytics.

“It’s about moving the tension away from output metrics and into input metrics that matter day to day to the people who make the decisions that can make a difference to the organisation,” he added.

“If we can say to middle managers ‘in your part of the business there’s an issue that returning mothers only stay for one year’, then we can set some metrics around that. This won’t make a difference to the figures such as the gender pay gap for another three to five years,” he continued. “But it makes a big difference to setting the foundations for change.”

This is why, instead of setting targets on narrowing its gender pay gap, PwC has targets to get more women into senior roles.

Executive board member and head of people Laura Hinton explained: “We have targets for all our business units on the percentage of women and ethnic minorities at different grades and we have a target that, by 2020, 24% of our partners will be women.

“We’re clear on targets from a grade perspective but haven’t set a target on the gender pay gap as we’re trying to close it as quickly as we can.”

“Some companies have set a gender pay gap target and are now struggling to make it happen,” agreed reward and performance partner Alastair Woods.

As head of diversity, inclusion and wellbeing Sarah Churchman explained, progress in getting women into leadership roles can actually lead to a worse gender pay gap in the short term.

“When we have a good year [for equal promotions] this can actually make our gender pay gap worse as women being promoted go in at the bottom pay band for the level above and the existing people in that band are predominantly men and they go up the pay band, so the figures can actually look slightly worse than before,” she pointed out. “That’s why we need to look at all the data points to really work out what the information is telling us and what we need to do.”

This discussion came as PwC released new research on the gender pay gap. It found that the sector a company operates in is one of the biggest factors influencing the size of its gap.

Sector has a greater impact than the number of employees in the company, according to the research, which was based on an analysis of the mean data submitted to the government by the roughly 10,000 companies that have disclosed their pay gaps so far. The financial services sector had the highest gap while hospitality had the lowest.

Commenting on the findings, Terry said that the “issue is whether women want to go into that industry at all”.

He encouraged organisations to realise that it is not a “competitive advantage issue” to work together on the matter. Instead competitors should collaborate to solve the problem in their sector.

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