New laws come into force tomorrow that require employers with 250 or more employees to comply with gender pay gap reporting. Employers captured by the law will need to take a 'snapshot' of their workforce on the 5th April each year and publish gender pay gap information across six different metrics in a prescribed format. Today is the first 'snapshot' day for many employers who will now have 12 months to collate and publish their findings.
Whilst there may be a temptation to view gender pay gap reporting as a burden, as an additional legal obligation, I think it should be seen as a key opportunity to re-ignite the debate around diversity in the workplace. Plenty of research points to the fact that better diversity within a workplace leads to better results. If we focus specifically on gender diversity, statistics paint a compelling picture: for instance for every 10% increase in gender diversity, earnings before interest and taxes are likely to increase by 3.5%; gender diverse companies are more likely to outperform by 15% (research conducted by Mckinsey & Company).
If we harness the concept that diversity leads to better results, gender pay gap reporting is therefore critical in bringing the diversity debate to the forefront. Aside from the importance of being able to identify ways to close the gap, employers will also be forced to consider why the gap exists in the first place. Questions around the types of roles available, who typically fills those roles, what characteristics have traditionally been associated with certain roles, job flexibility and so on will push employers to think about whether they are doing enough to encourage true diversity in their organisation. We all know from an intellectual standpoint that diversity is a good thing, but in reality we find it march harder to apply. So at its simplest, the new requirements will force the conversation to happen; it is bringing gender back on the agenda which must in turn lead to a wider conversation about diversity as a whole.
“It’s also an opportunity to explore why the gap exists and looking at what practical steps can be taken to reduce it, as well as creating a compelling narrative for employees and other stakeholders about what you’re doing and how.”