27 February 2021
Gender pay gap reporting: how data analytics enables positive change
Among the regulatory tools included as part of our new Managed Data Service offering, customers can access all the resources and support they need to comply with statutory gender pay gap reporting requirements.
Beyond this, with the right reporting and toolkit, gender pay analysis becomes much more than a tickbox compliance exercise. It can provide precisely the springboard you need to bring overlooked talent to the fore, strengthen your organisation’s reputation and boost performance.
What the law says
The Gender Pay Gap Regulations (2017) apply to virtually all employers in the public, private and voluntary sectors with a headcount of 250 employees or more.
Under the rules, employers are currently required to make the following information publicly available:
Gender pay gap (mean and median averages)
Gender bonus gap (mean and median averages)
The proportion of men and women receiving bonuses
The proportion of men and women in each quartile of the organisation’s pay structure
Beyond the rules: the benefits of in-depth analysis
At first glance, it’s easy to see how the gender pay reporting rules may be viewed as yet another regulatory hoop to jump through. This is especially the case if HR or finance managers are still required to sift through multiple systems, retrieve the right data for their prescribed ‘snapshot dates’ and manually interpret it.
Then there are the forward-thinking organisations; the employers who are much more inclined to view pay reporting as a trigger for improvement - not just a regulatory requirement. Here are some of the key business benefits to taking such an approach:
Fleshing out your supporting narrative
Under the rules, if the reported information shows a pay gap, employers are encouraged to provide a “supporting narrative”, explaining the presence of the gap and (ideally) setting out how you intend to address it.
Data analytics allows you to drill into the numbers to pinpoint why a gap may exist. For instance, it may be that the issue is linked to employees within a particular job grade, department, branch office or age bracket. Using this as a starting point, you can then ascertain why the gap exists, and (where appropriate), formulate a plan of action to address it.
This allows you to formulate a much more concrete supporting narrative. If you are putting forward a plan of action, you might even go a step further with a predictive model to show how long it will take for the gap to be reduced once your proposed measures have been enacted.
Performance and efficiency issues
Are certain categories of employee less likely to take up training opportunities? Are they more reluctant to apply for internal promotion? An analytical approach to gender pay gap reporting can highlight a range of HR issues that may need addressing. For instance, should you take steps to make your training programme more user-friendly and accessible? This can help you ensure your talent is better utilised, boosting performance overall.
According to LinkedIn, 75% of recruits thoroughly research potential employers before applying for roles. They look for tell-tale signs that indicate whether they are likely to be treated fairly, including gender pay gap information. So even if your figures currently do demonstrate a gap, the fact that you have an evidence-based plan in place to tackle it will send a strong message about your commitment to fairness.
The same applies to attracting customers. Let’s say you are a private organisation bidding for a public sector contract. The fact that you have obviously analysed your figures and have taken steps to redress pay disparities may be a key factor in your favour.
The challenges of reporting
Whoever is assigned with the task needs to have a sound understanding of the organisation’s payroll and the make-up of the workforce to compile the report. Where pay gaps are identified, it may involve liaising closely with the relevant departments or branches to ascertain the reasons why.
In all likelihood, this is no quick admin task that can be run off in an afternoon. Especially if you do not have reporting tools at your disposal, it can create an unwelcome extra strain on stretched resources.
Providing accurate calculations based on the pay data for 250+ employees is no mean feat. Firstly, you need to identify the right data for the right periods. This may need to be cleansed and then exported into your chosen format.
There’s also the often tricky question of which employees to include in the calculation. For instance, employees on long-term leave are only included if they are still on full pay. Agency workers are generally considered as employees for the providing agency rather than your organisation. However, self-employed workers will need to be included under certain circumstances.
It’s a matter of understanding how to apply the rules, as well as being able to isolate precisely the information you need from your HR databases.
Managed Data Service is a new offering that enables you to pick and choose precisely the reporting capabilities your business requires from across a range of technologies.
As part of this, we offer a selection of solutions designed not just to keep you on top of reporting obligations, but also to deliver truly valuable HR insights. Day 2 of our ‘Data Week’ includes a workshop that focuses on gender pay gap reporting requirements and how we can help you to manage them effectively and efficiently.