Gender pay gap - An opportunity for increased profitability and value creation.

 

Is this a difficult statistic to report - or could paying women more increase your company profits? Companies with more than 250 employees have had to report on their gender pay gap and some of the results are eye watering.

But could firms take this as an opportunity to change things? Getting more women in senior, highly paid positions? Research shows companies with gender diversity in their executive teams are 21% more likely to experience above-average profitability, compared with companies with poor diversity.

22 March 2018

The Stats

Not many will be surprised of the difference between the salaries of men and women, but many of us are surprised at the level of difference, even without partner earnings being included (as they are exempt from the reporting).

  • HSBC reported a mean gender pay gap of 59% the biggest gap for a UK Financial Services organisation

  • Goldman Sachs reported a mean gender pay gap for its UK business of 55% and a mean bonus gap of 72%

  • In the South West, Hargreaves Lansdown reported a mean gender pay gap of 28% and a mean bonus gap of 72%

  • And Mitie reported a mean gender pay gap of 24% and a mean bonus gap of 70%

Many employers explain the reason for the pay gap as being the lack of women they have in senior positions this is clearly part of the problem, but it’s something that’s been ignored for a long time. Organisations say that they are doing a lot to attract more women into these roles, but not much has changed, McKinsey research shows a 1% increase in women in C Suite positions over 3 years from 2012 to 2015.

Companies with more than 250 employees have to report Gender Pay Gap figures annually, there are risks for them, it’s possible that some of their clients may start demanding change and prioritising working with organisations with an acceptable gender pay gap, a good mix of senior women as well as representations from other diverse groups, we’re certainly seeing a trend from shareholders for this.

But this is not just about statistics that you need to report, in fact what these businesses are missing is the huge positive difference that having gender diversity (and other diversity) can have.

The Opportunity

McKinsey report that in their latest research Delivering through Diversity, companies in the top quartile for gender diversity on their executive teams were;

21% more likely to experience above-average profitability than companies in the fourth quartile, they state that gender diversity is correlated with both profitability and value creation. For ethnic and cultural diversity, there was a 33 percent likelihood of out-performance on profit.

The Solution

If getting more senior women into organisations is one key area of focus that can improve the gender pay gap. Why aren’t there more senior women?

  • Bias in the recruitment process - there is a lot of evidence to say this is part of the problem

  • Unattractive culture - in a board made up of pale, stale, males; being the only women may not be that appealing

  • Work/life balance - offering flexible working options that support family life

  • Opportunity to return to work after a career break 

One of the key reasons why women drop out of these senior management roles is that often these roles come along at the same time as children. These women often want to return to work in their senior roles, but traditionally the majority of companies still believe that these roles can only be done by one person, working full time, which cuts off the opportunities to continue in senior management for women.

But there is positive news, Office for National Statistics (ONS) data shows that these women want to work, particularly, as their children get older.

  • Mothers with a youngest dependent child aged three or four years old have the lowest employment rate of all adults with or without dependent children (65.1%)[ONS]
  • 1.1 million (75.2%) inactive or unemployed mothers stated they would definitely or probably return to work in the future.[ONS]
  • Mothers with young children are more likely to go back to or begin full-time work now than 20 years ago ONS

Will most firms experiencing skills shortages and challenges recruiting, they can do a lot more to offer genuine flexible working options to attract these candidates back to the market, including offering returnship programmes and flexible working options.

More than 10,000 firms have published data, with 78% having a gender pay gap in favour of men. (Government Equalities Office)

Flexology provide recruitment services focused on flexible working for professionals and help clients to access an untapped pool of talented professionals.

We’re looking forward to supporting our clients in their measures to improve the balance, which will not only improve their reporting, but also help them to increased profitability and value creation.

Get in touch to find out more kristal@flexology.co.uk